MONEY retirement planning

One Thing Successful Retirement Savers Have in Common

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With the markets rebounding, workers with 401(k)s feel more confident about retirement. Everyone else, not so much.

Retirement confidence in the U.S. stands at its highest point since the Great Recession, new research shows. But the recent gains have been almost entirely confined to those with a traditional pension or tax-advantaged retirement account, such as a 401(k) or IRA.

Some 22% of workers are “very” confident they will be able to live comfortably in retirement, according to the Employee Benefit Research Institute 2015 Retirement Confidence Survey, an annual benchmark report. That’s up from 18% last year and 13% in 2013. But it remains shy of the 27% reading hit in 2007, just before the meltdown. Adding those who are “somewhat” confident, the share jumps to 58%—again, well below the 2007 reading (70%).

The heightened sense of security comes as the job market has inched back to life and home values are on the rise. Perhaps more importantly: stocks have been on a tear, rising by double digits five of the last six years and tripling from their recession lows.

Those with an employer-sponsored retirement plan are most likely to have avoided selling stocks while they were depressed and to have stuck to a savings regimen. With the market surge, it should come as no surprise that this group has regained the most confidence—71% of those with a plan are very or somewhat confident, vs. just 33% of those who are not, EBRI found. (That finding echoes earlier surveys highlighting retirement inequality.)

Among those who aren’t saving, daily living costs are the most commonly cited reason (50%). While worries over debt are down, it remains a key variable. Only 6% of those with a major debt problem are confident about retirement while 56% are not confident at all. But despite those savings barriers, most workers say they could save a bit more for retirement—69% say they could put away $25 a week more than they’re doing now.

At the root of growing retirement confidence is a perceived ability to afford potentially frightening old-age expenses, including long-term care (14% are very confident, vs. 9% in 2011) and other medical expenses (18%, vs. 12% in 2011). The market rebound probably explains most of that, though flexible and affordable new long-term care options and wider availability of health insurance through Obamacare may play a role.

At the same time, many workers have adjusted to the likelihood they will work longer, which means they can save longer and get more from Social Security by delaying benefits. Some 16% of workers say the date they intend to retire has changed in the past year, and 81% of those say the date is later than previously planned. In all, 64% of workers say they are behind schedule as it relates to saving for retirement, drawing a clear picture of our saving crisis no matter how many are feeling better about their prospects.

Those adjustments are simply realistic. Some 57% of workers say their total savings and investments are less than $25,000. Only one out of five workers with plans have more than $250,000 saved for retirement, and only 1% of those without plans. Clearly, additional working and saving is necessary to avoid running out of money.

Still, many workers have no idea how much they even need to be putting away. When asked what percentage of income they need to save, 27% said they didn’t know. And almost half of workers age 45 and older have not tried to figure out how much money they need to meet their retirement goals, though those numbers are edging up. As previous EBRI studies have found, workers who make these calculations tend to set higher goals, and they are more confident about reaching them.

To build your own savings plan, start by using an online retirement savings calculator, such as those offered by T. Rowe Price or Vanguard. And you can check out Money’s retirement advice here and here.

Read next: Why Roth IRA Tax Tricks Won’t Rescue Your Retirement

TIME Innovation

This Is How Tech Will Totally Change Our Lives by 2025

Get ready to sell your own data and use algorithms on the job

The ever-increasing hunger for data will fundamentally change the way we live our lives over the next decade. That’s according to a new report by the Institute for the Future, a nonprofit think tank that has released a set of five predictions for the ways tech will change the future.

Personal data will continue to be shared, bought and sold at an ever-quickening pace, perhaps with more benefits to consumers. In the future, people might be able to personally sell info about their shopping habits or health activities to retailers or pharmaceutical companies, according the report. The Internet of Things is also expected to continue to expand, with predictions that everything from cars to coffee cups will be connected to the Internet by 2025.

Increasingly sophisticated algorithms will help workers in knowledge fields such as law and medicine navigate large bundles of information. Automation could either enhance these jobs or replace them outright, depending on how different professional fields advance.

Multisensory digital communications will also become more common in the future. The Apple Watch, which sends notifications via a wrist tap and allows users to transfer the rhythm of their heartbeat to other watches, offers a peek at the way senses aside from sight and sound may be used to communicate.

Finally, privacy tools and technology will likely improve in response to the vast amounts of data that users are constantly sending and receiving from the cloud. Striking a balance between leveraging data to increase efficiency and protecting the privacy rights of individual users will be an ongoing tension in the coming years.

TIME Innovation

Five Best Ideas of the Day: April 16

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. Go ahead and start a new career in your fifties. It’s easier than you think.

By Donna Rosato in Money

2. This is what sex-ed would look like if it took place entirely on social media.

By Kate Hakala in Mic

3. Here’s why the FDA doesn’t really know what’s in our food.

By Erin Quinn and Chris Young at the Center for Public Integrity

4. What critical resource helps the sharing economy make billions? People trusting people.

By the editorial board of the Christian Science Monitor

5. Could a continent-wide CDC for Africa stop the next Ebola outbreak?

By Jim Burress at National Public Radio

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

MONEY salary

How to Get the Raise You Deserve

Two-thirds of people asking for a raise get at least some of the money they request. MONEY's Donna Rosato has tips on how to ask for more pay.

TIME Innovation

Five Best Ideas of the Day: April 13

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. Why do we need human pilots again?

By John Markoff in the New York Times

2. We thought education would unlock the potential of Arab women. We were half right.

By Maysa Jalbout at the Brookings Institution

3. Peru found a 1,000 year-old solution to its water crisis.

By Fred Pearce in New Scientist

4. Why Saudi Arabia might need to break the country in two to “win” its war in Yemen.

By Peter Salisbury in Vice

5. Startup accelerators are great…we think.

By Randall Kempner and Peter Roberts in the Wall Street Journal

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME Careers & Workplace

There’s Actually a Secret to Getting a Raise—And This Is It

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And, no, it's not switch careers

It’s no surprise that working in a big city like New York, Chicago or Los Angeles means you might earn more, but as it turns out, where you live can affect how much you earn pretty much anywhere in the country. In other words, if you’re not happy with what you make, think about switching cities rather than careers.

TheLadders.com crunched the numbers to see just how big of a difference location can make in your earnings potential. It identified 21 jobs with salary gaps of 98% or higher as well as the highest- and lowest-paying average salaries by city.

The top-paying location for nine of the 21 jobs is San Francisco, and three others are in two more California cities, Monterey and Sacramento. “San Francisco’s booming technology sector has created an unmet demand for particular skill sets, forcing companies to compete for these scarce talent resource and pushing up top tier salaries,” says Shankar Mishra, vice president of data science at TheLadders.

San Francisco is also a notoriously expensive place to live, of course. Longtime residents have protested what they see as an intrusion by big tech companies like Google pushing rents higher and clogging the streets with private shuttle buses for employees.

Many of the jobs with the biggest gaps are in marketing or communications, but almost every field turns up somewhere on the list, from tech to law to financial services to healthcare. In fact, a technology job tops the list. Information security officer jobs have the biggest gap identified by TheLadders at 139%. Workers in Boston make an average of $113,000, but people doing the same kind of job in Miami only pull down an average of $47,000.

In terms of dollars, the job with the biggest gap — a whopping $91,000 — is an enterprise account manager. People with this job make an average of $168,000 in Baltimore, but earn a comparatively paltry $77,000 in Milwaukee. (It’s kind of a vague title, but generally, it refers to a professional who sells and manages telecommunications or technology services to corporate clients.)

Once again, resurgent tech boom is a driving force behind this trend, Mishra says. “Big players in the technology industry are influencing the top end of salaries quite a bit, and the impacts aren’t just on tech-specific roles, but for other functions too,” he says.

For instance, this is why so many jobs in marketing and communications show up with big variations in pay and command much higher salaries in cities with strong high-tech sectors like San Francisco and the Silicon Valley area.

“Demand for most of the top-paying jobs in this field is being driven by the technology sector,” Mishra says. “To contrast, demand for these kinds of jobs is much lower in cities like Little Rock or Charleston,” he says. Those two Southern cities had the lowest average salaries for director of marketing and director of communications positions, respectively.

Two legal jobs — associate general counsel and associate attorney — made the list, and the results are similar. These positions pull down top salaries in the nation’s capital, while the lowest pay for both is in Louisville.

“The excess of lawyers combined with a lack of demand in Louisville has suppress their median salaries,” Mishra says. “The presence of the federal government in D.C. generates enough demand to keep pushing the top end of salaries in this field even higher.”

MONEY Jobs

March Jobs Report Disappoints

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A government report shows that the labor market struggled. What does that mean for your salary?

After months of impressive gains, employers slowed down hiring last month.

Employers added 126,000 jobs in March, while employment gains for January and February were revised down. Over the past three months, businesses have increased their payrolls by 197,000 workers a month. The unemployment rate held steady at 5.5%.

Hourly earnings, however, were a positive, rising 0.3% last month. Workers have seen a raise of 2.1% over the past 12 months, though, which is barely keeping pace with inflation.

Federal Reserve Chair Janet Yellen promised in a press conference last month that “we will be looking at wage growth,” adding that “we have not seen wage growth pick up.” A lack of sustained, accelerated wage growth is one reason the Fed has kept short-term interest rates near zero since the recession.

There have been other disappointments in the economy. As the dollar has strengthened against the euro, American exports have become less competitive in the global market place at the same time that economic weakness in Europe, China and Japan have reduced demand for U.S. goods. U.S. companies are starting to take it on the chin. According to S&P Capital IQ, large corporations are expected to see a 3.1% quarterly earnings decline in the first three months of 2015, the first drop since 2009.

Meanwhile U.S. productivity, measured by the growth of services and goods produced per hour worked, declined 2.2% in the last quarter of 2014.

“Wage growth will ultimately be constrained by productivity as employers cannot let paychecks increase faster than hourly output growth for years on end,” says Jack Ablin, chief investment officer for BMO Private Bank. “While job growth is the most important barometer of economic success, healthy wages play an important supporting role. Until productivity picks up, wage gains will likely be constrained.”

James Paulsen, chief investment strategist at Wells Capital Management, points out that productivity has only grown 0.8% annually in the last five years, compared to a post-war norm of 2.4%.

What’s holding productivity back? “The problem has been a lack of investment spending,” says Paulsen. Since the recession, the private sector “has been noticeably reserved with capital spending plans. Moreover, as a percent of GDP, real public sector investment spending has been declining steadily since 2010, falling recently to a 65-year low.”

Corporations aren’t going to invest unless there’s a demand for its products, which has been muted as U.S. consumers have spent the past half decade or so dealing with debt. Government spending has been limited due to sequestration.

Whether or not the Federal Reserve will tighten monetary policy by raising interest rates before the end of the year, while key employment indicators lag, remains to be seen.

MONEY Careers

Surprising Ways Older Workers Find Second Act Jobs

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Alamy

If you're older and have been out of work for a while, try these strategies to land a new job

What’s the secret to landing a new job when you’ve been out of work a long time?

A new report by the AARP Public Policy Institute uncovered some surprising strategies that older workers are using to get back into the workforce.

That’s important because, while the job market is significantly better overall, the situation is still dismal for the long-term unemployed. The jobless rate for people out of work six months or longer is 30% vs. 5.5% overall.

Older workers make up a distressingly large portion of that group: 45% of job seekers 55 and older have been looking for work for six months or longer.

The AARP report examined the job search strategies that led to reemployment for people age 45 to 70 who were unemployed some time during the last five years.

It found big differences in job search strategies between older workers who landed jobs and those who are still not working.

The overall picture is mixed: Among those older workers employed again after a long time out of the workforce, some were earning more, getting better benefits, and working under better conditions. But for many, the jobs were not as good as the ones they had lost: 59% of long-term unemployed older workers made less money, while 15% earned the same and 25% made more.

So, what set the successful job seekers apart? These moves stand out.

  • Embrace change. Almost two-thirds of reemployed older workers found jobs in an entirely new occupation and women were more likely to find work in a new field than men. Of course, some of the unemployed didn’t choose to switch occupations. But for others, the change was a decision to do work that was more personally rewarding and interesting or even less stressful with fewer hours. Whether it was by choice or design, broadening your job search may pay off.
  • Go direct. Older reemployed workers were much more likely—48% vs. 37% of those still looking for work—to contact employers directly about jobs instead of just applying to the black hole of online job postings.
  • Network strategically. Everyone knows that networking is the best way to get a new job but apparently talking to everyone you know may not be the most effective method. While half of those who landed a new job reached out to their network for leads, only 34% of the unemployed used personal contacts at all. But the reemployed were less likely to rely on friends and family to find out about job opportunities, focusing instead on professional contacts.
  • Move fast. When hit with a job loss, many people use it as a time to take a break or think about what they want to do next. That lost time can cost you. The reemployed were much more likely to have begun their job search immediately or even before their job ended than those who are still unemployed.

A couple other surprising findings about what works and what doesn’t: Conventional advice is that the long-term unemployed need to keep their skills up to date if they are jobless for a while. While that can certainly help, additional training didn’t make much difference between those who landed a job and those who remained out of work.

As for social media: While 56% of the reemployed found job boards a good source of job leads, just 13% said online social media networks such as LinkedIn and Facebook were effective in helping them get a new job.

Among the most ineffective strategies: Using a job coach, talking with a headhunter, and consulting a professional association.

TIME Innovation

Five Best Ideas of the Day: March 18

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. What does the world’s indifference to Syria’s horror tell us about ourselves?

By Barry Malone at Al Jazeera English on Medium

2. California has about one year of water left.

By Jay Famiglietti in the Los Angeles Times

3. Traditional democratic institutions are failing. It’s time for an upgrade.

By John Boik, Lorenzo Fioramonti, and Gary Milante in Foreign Policy

4. For the first time in four decades, the global economy grew last year, but carbon emissions didn’t. That’s huge.

By Brad Plumer in Vox

5. Can we build an Internet that includes the hearing impaired?

By Steve Friess in Time

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

MONEY inflation

3 Signs Inflation May Be Lurking Just Around the Corner

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Kutay Tanir—Getty Images

While consumer prices haven't been rising yet, several signs point to higher wages in the future. Here's what you should do.

After fits and starts and ups and downs, the American economy is finally looking strong — especially compared to Europe. U.S. gross domestic product grew 2.2% and 5% in the last two quarters of 2014, while the unemployment rate dropped in February to 5.5.%.

Yet inflation and wage growth, which are natural outgrowths of an accelerating economy, haven’t seemed to materialize.

At least not yet.

Despite years of unconventional bond buying and warnings from politicians and economists, consumer prices have actually risen less than the desired rate of the Federal Reserve.

The Consumer Price Index declined 0.7% in January, the steepest drop since 2008, thanks to cheap oil. If you strip out volatile energy and food prices, so-called core inflation only rose 1.6% in January over the past year, well below the Fed’s 2% target.

In fact, prices haven’t hit that Fed target in almost two years. Your paycheck has hardly fared any better.

But lately, there have been signs that show America’s workforce might at long last receive an overdue raise. About 70% of companies have said that wages are beginning to outpace inflation, according to the latest Duke University/CFO Magazine Global Business Outlook Survey. Industries like technology, manufacturing and health care should see wages grow by 3%.

A small business report points to a tighter labor force, as 26% of companies raised compensation (although that includes benefits like health care), and almost half said finding a qualified employee proved difficult.

What’s more, the 10-year break-even inflation rate, which is a gauge of how much prices are expected to rise annually over the next decade based in part on the yield of 10-year Treasury inflation protected securities — has been ticking up lately to about 1.8%, after touching a recent floor of 1.5% in the beginning of the year. The rate, to be fair, is still well below levels seen before oil’s drop.

So is inflation and wage growth finally set to take off?

That’s a question for Federal Reserve Chair Janet Yellen, who has said the Fed will remain “patient” when raising short term interest rates while price growth remains so benign.

This six-year herky-jerky recovery has made fools of many prognosticators, especially those who have shouted loudly that inflation is nigh. “Given that CFOs expect continued strong employment growth, it is surprising that wage pressures are not even great,” says Duke finance professor John Graham. Indeed.

What does this mean for your portfolio?

Well, one option is to add to your Treasury Inflation-Protection Securities (TIPS) holdings, especially short-term TIPS if you’re a conservative investor (though this should still be only a satellite portion of your investments).

TIPS have struggled recently after outperforming equities by 11 percentage points in 2011, and investors have started to put their money elsewhere.

But the best time to get inflation protection is when there’s little fear of rising consumer prices — and when inflation-protected bonds are cheap, like now. For instance, the Vanguard Target Retirement 2015 fund currently allocates about 8% of its portfolio to short-term inflation protection.

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