MONEY Planning

Have You Looked at Your Retirement Accounts Lately?

As a retirement investor, you are supposed to take the long view—ignoring one-day (or one-week) plunges in the stock market, sticking to your financial plan, and staying focused on a finish line that may be decades away. But you’re also a human being, who reads the news and wonders what a 588-point, one-day drop in the Dow has done to your 401(k) or IRA balance. This is your nest egg, after all. So after last week’s pullback in stock prices and today’s gut-wrenching drop, you couldn’t be blamed for sneaking a peek, even if it’s better not to check in daily. Have you?

MONEY everyday money

5 Things to Know Before Hiring a Wedding Planner

Father of the Bride
Buena Vista Pictures —Everett Collection In "Father of the Bride," Martin Short (second from right) played an unusually enthusiastic wedding planner

Be prepared to save a lot of time (though not a lot of money).

Whether or not to hire a wedding planner is really a decision about how many decisions you feel like deciding.

For some brides, the ability to leave the stress of the nitty-gritty details to a professional is worth setting aside 10% of their wedding budget—the amount Wisconsin-based industry veteran Nancy Flottmeyer recommends to cover a planner’s fees. Then again, some brides thrive on the planning process, and the (sometimes) thousands of dollars they’d pay a planner could be spent on the honeymoon (or, better yet, paying down credit card debt or establishing an emergency fund–you’re a grown-up now, you know).

One common misapprehension: don’t expect that hiring a planner will pay for itself via discounts and bargains that the planner will be able to snag. The value of a paid planner is that he or she has enough relationships in the industry to make sure you’re matched with the best vendors in your price range.

“We just know how to get the most out of your money,” says Flottmeyer, a Professional Wedding Planner™ and founder of Weddings by Nancy. “If a wedding planner promises they can get the best discounts, that’s just a price shopper.”

If you decide hiring someone is right for you, here are a few things you should know.

The main goal: a good relationship

The hands down, holy grail, No. 1 thing to consider when choosing a wedding planner is the relationship between the bride and the consultant. “The planner and bride have to connect on a personal level,” Flottmeyer says. If the relationship is strong, the planner can speak up during consultations with vendors to help the bride get the options that best suit her style. “I can tell if a business is rubbing the bride the wrong way,” Flottmeyer says. “I can say, ‘No, she hates it, let’s move on.'”

The best way to determine if your personalities mesh is to shop around for planners. Initial consultations let you get a feel for each other and determine whether or not you will be on the same page during the planning process.

Know what to ask during your consultation

Consultations also give you the opportunity to ask how much time the planner will be able to devote to your wedding (some have full-time jobs and plan on weekends, while others might take multiple weddings on the same day), get to know the planner’s past projects, and ask about their education.

“It’s very important to ask if they belong to any associations,” Flottmeyer advises. “You can’t survive in the industry on your own. You have to network.”

There are no formal education guidelines for wedding planning, but professional organizations like the Association of Bridal Consultants offer training classes that lead to industry certifications. Going with a planner that has stayed up to date on industry trends and specifics can help you feel confident that the money you’re shelling out for his or her fee is worth it.

Decide what kind of planner you are going to invest in

Planners offer different levels of service, so it’s important to make sure you know how much help you think you’ll need. Consulting and “day-of” services are cheaper but significantly less comprehensive than a full-service planner who will attend vendor meetings with you, help design your overall concept, and be there to make sure everyone sticks to a timetable. Consultants can help get you on the right track and offer advice, while day-of planners will only be there to help the ceremony you already planned run smoothly. Knowing what services are covered when you hire someone is extremely important and exactly why you need to read the fine print of your agreement (more on that later).

Many venues also offer planning services, but they might only deal with venue-related issues like rentals and day-of coordination.

It’s an expense—budget for it

Flottmeyer says it’s not uncommon for her to be reviewing a budget with a bride and find one key fee missing—the planner’s.

“A lot of clients put it outside the budget,” she says. Because certain elements are sometimes paid for by third parties (parents, for example), brides don’t always consider them in the overall cost. Though it’s likely the number skews high, estimates the average cost of a wedding at $31,213 in 2014. Using Flottmeyer’s 10% rule, you’re looking at a $3,000 line item that is completely missing from your budget. Not having a clear understanding of your expenses can lead to overspending, so it’s best to keep the budget comprehensive and focused.

Examine the contract

Some wedding consultants get paid by the businesses they promote, so you want to make sure to read the agreement closely before signing. Asking the consultant directly how they structure their fees, including whether or not they accept compensation from vendors, is a fair question, says Flottmeyer. “Ideally, the answer should be, ‘We recommend the best business for you,'” she says. They should be focused on connecting you with vendors that he or she believes are the best fit for your aesthetic and budget, not on collecting extra fees.

However, many planners have invested a lot of time in cultivating relationships with specific vendors, which can help a bride feel confident in the recommendations she is given. The planner-vendor relationship only becomes problematic when fees are prioritized over the bride’s wishes.

The contract will also outline the cost of services, which can vary greatly depending on the type of planner you’re hiring. Reviewing it with a fine-tooth comb can help you avoid miscommunications or surprises on your wedding day.

Bonus tip for getting more for your money:I always tell brides to treat everyone with respect,” Flottmeyer says. “When you do, the flowers get bigger, the band plays longer, and sometimes vendors might not charge you for little extras. It’s common sense—treat everyone kindly, and consider tipping or extra gifts as a thank you.”

TIME psychology

6 Common Strategy Traps Anyone Can Fall Into

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Shane Parrish writes Farnam Street

Strategy does not mean goal or objective

Strategy could be the most over-used word since leadership. How many strategies can one organization have? A lot of people say “strategy” when they really mean goal or objective.

One of the best books on Strategy is Roger Martin and A. G. Lafley’s Playing to Win: How Strategy Really Works.

In this excerpt they comment on the signals that a company has a worrisome strategy.

There is no perfect strategy—no algorithm that can guarantee sustainable competitive advantage in a given industry or business. But there are signals that a company has a particularly worrisome strategy. Here are six of the most common strategy traps:

  1. The do-it-all strategy: failing to make choices, and making everything a priority. Remember, strategy is choice.
  2. The Don Quixote strategy: attacking competitive “walled cities” or taking on the strongest competitor first, head-to-head. Remember, where to play is your choice. Pick somewhere you can have a chance to win.
  3. The Waterloo strategy: starting wars on multiple fronts with multiple competitors at the same time. No company can do everything well. If you try to do so, you will do everything weakly.
  4. The something-for-everyone strategy: attempting to capture all consumer or channel or geographic or category segments at once. Remember, to create real value, you have to choose to serve some constituents really well and not worry about the others.
  5. The dreams-that-never-come-true strategy: developing high-level aspirations and mission statements that never get translated into concrete where-to-play and how-to-win choices, core capabilities, and management systems. Remember that aspirations are not strategy. Strategy is the answer to all five questions in the choice cascade.
  6. The program-of-the-month strategy: settling for generic industry strategies, in which all competitors are chasing the same customers, geographies, and segments in the same way. The choice cascade and activity system that supports these choices should be distinctive. The more your choices look like those of your competitors, the less likely you will ever win.

These are strategic traps to be aware of as you craft a strategy.

Playing to Win is right up there with Good Strategy Bad Strategy on my list of must reads for anyone seeking an understanding of strategy as it relates to business.

This piece originally appeared on Farnam Street.

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TIME psychology

How to Go From Dreaming to Doing: 4 Steps to Motivation

Impossible to possible
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Eric Barker writes Barking Up the Wrong Tree.

You have stuff you know you should be doing. But it doesn’t get done. You need to go from dreaming to doing — but it’s hard.

You want to accomplish more at work, hit the gym, get a new job or study harder at school… but it’s not happening.

I’ve talked about strategies to make challenges easier like the 20 second rule. But what if you’re just not starting in the first place?

What gets you going when you’re not motivated to reach those longer term goals?

There’s a solution that can help you not only make change easier, but boost motivation. What’s the secret?


Yes, WOOP. It’s an acronym for 4 steps to achieving any goal based on research by Gabriele Oettingen:

  1. Wish
  2. Outcome
  3. Obstacle
  4. Plan

Can a method with the silliest name in social science really work? Yeah.

People who say they want to exercise more and use the WOOP method do dramatically better:


How does it work? I’m here to break it down for you.

The first step is wishing. We’re all pretty good at that — but it’s only part of the solution. In fact, if you do it wrong it can actually make things worse.

Here’s how to do it right.

1) Wish (But Don’t Stop There)

Everything starts with a wish. But if that’s all you do, you’re in real trouble.

Having a positive attitude is pretty much essential because a negative attitude makes us more likely to quit — or to never start in the first place.

But when that positive outlook become fantasizing, things go south really fast. Yes, dreaming about success is bad.

Via Rethinking Positive Thinking: Inside the New Science of Motivation:

Again and again, much to my surprise at first, the results turned out to be the same. Positive fantasies, wishes, and dreams detached from an assessment of past experience didn’t translateinto motivation to act toward a more energized, engaged life. It1 translated into the opposite.

Why? Derek Sivers has a great TED talk that explains it here.

Your emotional brain just can’t tell the difference between fantasy and reality.

When you fantasize, those older parts of your brain think you’ve actually achieved your goal. So rather than ramping up, motivation dials back:

Results indicate that one reason positive fantasies predict poor achievement is because they do not generate energy to pursue the desired future.

(Sorry, fans of “The Secret” — it just doesn’t work.)

Dreaming turns positive thinking into mere wishful thinking.

So if it doesn’t work, why in the world do we do it? Plain and simple: it feels good.

Just like stuffing your face or checking your email for the 216th time this hour, it feels great — but is counterproductive to long term achievement.

Via Rethinking Positive Thinking: Inside the New Science of Motivation:

Dreaming about a positive future seemed to protect against sadness in the short term but promote it over the long term. It coincided with a short-term hit of pleasure that ultimately wore off and predicted increased depression.

Want to lose weight? Those who merely wished “lost 24 fewer pounds lessthan those who pictured themselves more negatively.”

Want to meet that special someone? “The more students…indulged in positive fantasies…the less likely they reported initiating the relationship.”

Trying to get a new job? “The more frequently students had experienced positive fantasies, the less success they had.”

(For more on how to motivate yourself, click here.)

Okay, so wishing by itself can be very bad. What did the research say the missing pieces were?

2) See A Specific Outcome

This part isn’t hard. Oettingen‘s work says you need to take your wish and crystalize it. Be specific.

So if “more money” is your wish, the desired outcome might be “get a raise at work.”

Wishing for better work-life balance? Your outcome could be “No work on weekends. Ever.”

(For more on setting goals, click here.)

So your wish is now clear. But this is when things get trickier. It’s time to go negative.

3) Envision Your Obstacles

Oettingen calls this “mental contrasting.” You need to deliberately think about the obstacles that might prevent you from achieving the outcome.

Now here’s what’s really fascinating: some people do this and get more motivated. But others end up less motivated afterward.

Does that mean this technique is less powerful? No, it means it’s trulyawesome. Why?

The people who did not get a boost were the ones who realized their current goal was unrealistic.

Mental contrasting didn’t only motivate people — it also helped them realize which goals were actually worth pursuing.


When people looked at obstacles and realized they had a good chance of overcoming them (“I want to get a raise”), motivation increased.

Those who reviewed obstacles and realized their goals were unrealistic (“I want to be Prime Minister of Australia by Thursday”) reported less motivation.

The latter were dissuaded and didn’t waste their time. So outcomes for both groups that used mental contrasting were positive.

And this isn’t just egghead science — it lines up with ancient wisdom. The Stoics were saying it thousands of years ago.

(You never heard about it? Those guys are dead and don’t have a big social media presence. That’s why you have me.)

Ryan Holiday, author of the excellent book The Obstacle Is the Way explains the Stoic perspective:

…we look to envision what could go wrong, what will go wrong, in advance, before we start. Far too many ambitious undertakings fail for preventable reasons. Far too many people don’t have a backup plan because they refuse to consider something might not go exactly as they wish.

Today this technique not only helps CEO’s close deals, it saves lives.

Dan Coyle, the expert on expertise, says it’s an essential part of how US Special Forces prepare for every dangerous mission:

…they spend the entire morning going over every possible mistake or disaster that could happen during the mission. Every possible screwup is mercilessly examined, and linked to an appropriate response: if the helicopter crash-lands, we’ll do X. If we are dropped off at the wrong spot, we’ll do Y. If we are outnumbered, we’ll do Z.

(For more on the power of negative visualization to improve decision making, click here.)

So you’ve stared your obstacles in the face. There’s just one more step to getting what you want…

4) Make A Plan

Mental contrasting is so powerful because it juxtaposes wishes with reality. It stress-tests your desired outcome.

Questioning your wishes leads to insights about how to proceed in the real world.

Dan Pink explains the power of questioning colorfully in his great book “To Sell Is Human.”

In a sentence: Ignore Napoleon Hill and listen to Bob the Builder.

Yeah, that guy.

Napoleon Hill said “think positive.” Tell yourself you can do it. Like saying, “I will make a million dollars.” It’s The Secret all over again.

But Bob The Builder doesn’t make a statement. He asks kids a question: “Can we build this?”

Seems like a tiny difference but questions are powerful. It makes you realistically consider the problem.

Via To Sell Is Human:

Those who approached a task with Bob-the-Builder style questioning self-talk outperformed those who employed the more conventional juice-myself-up declarative self-talk.

Questioning builds plans. And plans help you be more productive, beat stress and even increase happiness.

What does the research say is the best way to make sure your plan addresses your obstacles?

The study of “implementation intentions” shows you should create little “If-Then” responses to known stumbling blocks.

For instance:

If I’m on my diet and I’m offered dessert, then I will just order a cup of coffee.”

Research has shown this method even helps recovering drug addicts get back on their feet and into the workforce.

Via Rethinking Positive Thinking: Inside the New Science of Motivation:

…eight of the ten addicts who had formed implementation intentions had written their resumes. Of the ten addicts who hadn’t framed a prior plan, none had done so.

(For more on how to get the most out of “If-Then”, click here)

So you understand the four parts of WOOP. Now how do we round all this up and actually get it working in our lives?

Sum Up

Try it now. I mean right now. Reading is not doing.

Watching football doesn’t make you a quarterback, 60 years of sitcoms hasn’t made people funnier and watching Bruce Lee won’t teach you to kick ass.

You want to go from dreamer to do-er? Try it now:

  1. Wish: What do you dream of achieving in the future?
  2. Outcome: Be specific. What form will that result take?
  3. Obstacles: What’s in the way?
  4. Plan: When that obstacle comes what will you do about it? “If ____ happens, then I will _____.”

Can you see how this takes simple dreaming and puts you on a path to getting what you want?

WOOP reminds me of one of my favorite quotes from Steven J. Ross:

There are three categories of people: the person who goes into the office, puts his feet up on his desk, and dreams for 12 hours; the person who arrives at 5 A.M. and works 16 hours, never once stopping to dream; and the person who puts his feet up, dreams for one hour, then does something about those dreams.

Blog posts don’t change your life. You do. Now go WOOP.

This piece originally appeared on Barking Up the Wrong Tree.

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MONEY Planning

When Conventional Wisdom About Retirement is Good Enough

Retirement investing isn't an exact a science. Rather than worrying whether the rules need to be tweaked, just start saving.

What keeps you up at night?

As a money manager, I recently polled my clients on several questions, and that was one of them. Replies ranged from “my bladder” to worries about the Federal Reserve printing too much money.

The most common answer, though, was fear of outliving one’s savings.

For decades, people have confronted the issue of how much they need to retire. Today the topic hits with special force. People are living longer, and the financial crisis of 2007-2009 set millions of people back twenty squares on the economic game board of life.

Now, there’s much debate about whether traditional retirement planning advice needs to be tweaked.

The traditional advice on income, for instance, is that people in retirement need about 60% to 70% of their old annual income to keep roughly the same standard of living. Remember, when you retire, your taxes may be lower, your children may be grown, your commuting and clothing expenses may shrink, and you may move out of a big house into a smaller house or apartment.

If savings and investments were your sole source of income, you would need – again, by conventional wisdom – about 25 times that sum in hand when you start your retirement. That is based on the traditional assumption that you can safely withdraw 4% of your initial nest egg each year and still have it last at least 30 years, regardless of market conditions.

That means if you earned $100,000 a year at the peak of your career, you would need about $65,000 a year in retirement, and 25 times that amount is $1,625,000.

Of course, inflation may increase your costs as years pass. If inflation runs at a 3% clip, a loaf of bread that costs $2.50 today will cost $4.50 in 2034. At 5% inflation, the same loaf would cost you $6.62.

You can offset some of the effects of inflation by your savings and investments, post-retirement. My father retired at 77 but invested in the stock market, logging prices and trends on charts he kept by hand. When he died at 98, his net worth had increased 75% from the day he retired.

Social Security can help, too. Despite doomsayers’ screeds, I believe the Social Security system will be around in 30 years. But benefits may be a little less generous than they are today.

These days, I see a lot of articles by financial planners questioning the guideline that it’s prudent to withdraw 4% a year.

I’ve seen planners argue for anything from a 2.8% withdrawal rate to a 5% one.

Those arguing for a smaller withdrawal rate — which implies the need for a bigger nest egg — say it’s hard to earn 4% a year after taxes without wading into risky investments. Savings accounts are paying a paltry 1% to 2%, and that’s before taxes.

But I think that’s a short-term view. Savings rates probably won’t stay as paltry as they are – just as inflation didn’t stay sky-high, as it was in the early 1980s.

For the long run, I think the 4% rule provides a decent, if crude, approximation.

Let’s be realistic here. Accumulating a pre-retirement hoard of 25 times the expected annual need is an ambitious target to start with.

But it’s something to strive for.


China’s Culture of Compliance Is Crippling the Country

Demonstration at Tiananmen Square in Beijing, China on June 01st, 1989.
Eric Bouvet—Gamma-Rapho/Getty Images Standing tall A Chinese youth at a demonstration in Beijing’s Tiananmen Square on June 1, 1989

Next week will be the 25th anniversary of Tiananmen Square. It was a turning point not only for China, but also for the world, in the sense that it heralded a new era in which growing wealth and growing political freedom in emerging markets didn’t necessary go hand in hand. This year, China will very likely overtake the U.S. as the world’s largest economy. It has certainly become wealthy. But it has also become less free–as have so many of the world’s largest developing nations–think Russia, Turkey, many parts of Africa and Latin America, etc.

The question is, that can juxtaposition last another 25 years—or even another five? It’s something I’ve been thinking about a lot lately, particularly as I delve into New Yorker writer Evan Osnos’ very interesting new book on China, “Age of Ambition: Chasing Fortune, Truth and Faith in the New China” (FSG). The core premise of the book is that individual ambition and authoritarianism in countries like China will inevitably come into conflict with one another. As people get richer, they want more freedom, and they put pressure on their governments to deliver it. The problem is that these governments are often much better at delivering wealth than they are at delivering anything close to liberal democracy.

I think we may be reaching a tipping point in the next few years around that juxtaposition between growth and choice in the emerging world. China is, as always, the most dramatic example of this. The recent cyber-hacking scandal, for example, was portrayed by many pundits as yet another example of how the Middle Kingdom is leaping ahead of U.S. government and business interests, stealing American intellectual property and using it to gain a competitive edge. But as I argued, China’s IP theft actually underscores what a “me too” economy the Middle Kingdom still is. China is good, very good, at copycatting other people’s ideas (Osnos’ stories of various Chinese entrepreneurs, like the village woman behind the Chinese version of, are fascinating on this score), but it has yet to create many global brands–aside from Lenovo’s computers and the college mini-fridges made by the low-end white goods producer Haier.

I think the lack of a top-shelf innovation culture has a lot to do with the lack of choice in Chinese society. I once spoke to a Wal-Mart executive in China who told me that he had trouble getting employees in one department to address basic problems in another–picking up boxes that had fallen off a shelf, or order new supplies, for example–because they were afraid of stepping out of their silos. That’s not about work ethic–the Chinese have that in spades–but a culture of compliance. In China, it’s important, sometimes deadly important, to swim in your own lane.

Another issue with the growth of higher end Chinese business is that entrepreneurs don’t trust the stability of the government. I’ve heard time and time again from wealthy people in China (many of whom are looking to get their money out – witness the percentage of high end property purchases in luxury real estate markets worldwide that are made by the Chinese) is that it doesn’t pay to develop businesses for the long haul here, because uncertainly and political risk is so high. People tend to get in, get out, and become serial entrepreneurs, rather than spending decades working on innovation, a la developed countries like the U.S., Japan, or Germany.

How will all this affect China? If the Middle Kingdom can’t make the leap to the “middle income” stage of development, which history shows is the trickiest one (only a handful of developing countries globally have made it), then unemployment will rise and social stability will fall. How will that affect Americans? In a sense, it already is. Trade tensions mean many U.S. companies are rethinking how, or if, they’ll do business in China, with myriad ramifications for us all. For more on all of that, as well as the economic legacy of the Tiananmen event, listen to my radio show, Money Talking, on WNYC this week.

TIME Financial Planning

Retirement Planning’s “Conventional Wisdom” Needs Rethinking

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Projecting how much money you’ll need in retirement isn’t as easy as it used to be. Longer lifespans, the rising cost of healthcare and a market pushing investors into more lucrative but riskier investments all combine to throw the old stalwarts out the window.

Here are some “common sense” retirement-planning beliefs that experts say you shouldn’t rely on, along with what you should be looking at instead.
The 20-year, 70% rule: “The longer life expectancies we now enjoy have basically made any traditional retirement models obsolete,” says Mitchell Goldberg, an investment professional with ClientFirst Strategy, Inc. People planning for retirement today should plan on making their nest eggs last for 30 years rather than 20. Even with a million-dollar portfolio, Goldberg says, dividing that into a 30-year rather than a 20-year horizon means cutting your annual income from $50,000 to $30,000 — a big drop.

And with retirees living more active lives, assumption that you’ll need 70% percent of your pre-retirement income in your golden years is both outdated and based on a flawed metric, to boot, says Rich Arzaga, founder and CEO Cornerstone Wealth Management, Inc.

“Most retirees actually spend 117% of their current expenses, not 70% of their income. This is a sizable gap, and can have a dramatic impact on financial independence goals,” he says.

“Income and expenses are two different metrics,” Arzaga points out. “And there can be a big difference between the two.” Especially early on, new retirees might overspend on travel, hobbies or other pursuits they finally have the time to undertake. “When you take [assets] out upfront, you start to draw capital very quickly,” he says. A better alternative is looking at your current and projected spending, factoring in your preferred retirement lifestyle and goals.

The linear-growth, steady rate-of-return model: A lot of plug-and-play retirement calculators assume linear growth. But in real life, things don’t always work out like that (as anyone nearing retirement when the 2008 financial crisis hit can attest).

Models that assume a year-over-year 8% or 10% rate-of-return might be simple, but they hide the truth, Goldberg says. “I’ve seen many models from various constituencies in the financial services industry with their models and their expected rates of return. These might work well for the financial services salesmen, but I think the models I see put in front of consumers are overly optimistic. I can’t stand it.”

“One cannot assume that there won’t be market corrections and negative returns,” says Debra A. Neiman, principal and founder of Neiman & Associates Financial Services, LLC. “It is better to incorporate negative market returns into the mix to give people a better sense of the parameters in the form of average case and worst case scenarios,” she says. Neiman says Monte Carlo simulations, which take both good and bad market swings into account, come closer to approximating what a retiree can expect (although even they can’t predict the future).

Personal finance expert Peter Dunn has a table on his blog that shows the difference between a 12% annual return and a 12% average return over 10 years. They might sound like they’d be the same, but a steady rate of return — which is much less likely to happen, given the typical market volatility — yields 7% more at the end of a decade.

And long-term bonds aren’t a panacea. Today, they’re attractive because cash equivalents earn so little interest, but when interest rates go up — as they inevitably will — that dynamic is going to change.”With a 1% increase in the prime rate, a 30-year bond can go down by as much as 17%,” Arzaga says. Intermediate bonds with 20-year terms will be impacted about half as much, he says. “The longer the hold, the bigger the drop.”

The 4% withdrawal and 3% inflation assumptions: “Advisors tend to use a 4% draw rate to achieve success, but studies show it could be as low as 2.75% for the calculation to work,” Argaza says. “We don’t know what’s going to happen in the future, which is why that 4% assumption can fail.”

How the market performs overall, especially early in your retirement, has a greater impact on your nest egg over the long term. If you have the bad luck reach retirement age in a downturn, consider reining in your spending, withdrawing less or just putting off retirement for a few years.

And although the core Consumer Price Index is a widely-used metric for inflation, Goldberg says it’s a flawed barometer because it doesn’t include volatile food and energy costs. “The issues is food and energy are very big components” of many retirees’ budgets, he says. Healthcare costs — which seniors tend to incur to a disproportionate degree — are also rising faster than the overall rate of inflation.

“$50,000 today with even a little bit of inflation is going to be like $40,000 in the next seven or eight years,” Goldberg says.

The other mistake is in using net work, rather than liquid assets, as your baseline for withdrawal, Arzaga says. Yes, you may have equity in your home, but unless you get a reverse mortgage — a step that isn’t a good idea for everybody — there’s no way to tap that equity without finding another place to live.

TIME Financial Education

The Economy is Big News–So Why not Teach it?

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With the economy on the front page most days the past six years, you might think economics and personal finance would be a prominent subject in our schools. Yet less than half of states require an economics course in high school and little more than a third require one in personal finance, according to a new survey.

The long trend is mildly positive. For the first time, all 50 states and the District of Columbia include economics in their K-12 education standards, meaning they have guidelines for those schools that want to offer such a course. Meanwhile, more states are offering and requiring personal finance courses.

These are the chief findings in the Council for Economic Education’s 2014 Survey of the States report, out today. The CEE, which surveys each state every two years, is a strong advocate for financial education and believes that requiring school courses in economics and personal finance is an important path to progress.

“A more financially capable population can result in a larger and more efficient market for financial products, greater participation in asset building and greater financial stability,” Richard Ketchum, Chairman of the FINRA Investor Education Foundation, states in the report. “It is therefore in everyone’s interest that action be taken to improve the financial capability of all Americans.”

Ketchum notes that young people are entering adulthood saddled with debt: 36% of Millennials have student loans outstanding and 55% say they might not be able to repay this debt. Only a third have emergency savings while about the same share have unpaid medical bills. Nearly half carry a balance on their credit cards.

Financial education in schools is seen as one way to bring such numbers down over time. But first we have to bring up the numbers of states and schools that offer or require such coursework. The sobering numbers related to economic education are especially troubling because virtually every family in America was touched by economic troubles during and since the Great Recession.

While every state is on board with economic standards, just 24 require that an economic course be offered. That’s down one since the last survey. The number of states requiring that an economics course be taken in high school remains constant at 22. These numbers argue that the states are taking a pass on the mother of all teachable moments.

The news is a little better on the personal finance front. Now 18 states require that high schools offer a course, up from 14; and 16 states require personal finance instruction, up from 13 in the last survey. It’s not clear why there’s been more progress in personal finance. In part, the states that have embraced economic education are now picking up on the need for personal finance too. Another explanation is that while the hardships of the past half-decade may be better understood through an economics course, it’s better understanding of personal finance that will allow families to manage their way through tough times.

Despite the progress, these courses remain a tough sell at the state level—and that is where the battle lines are drawn. Unlike in the U.K. and other regions with a federal mandate for financial education, state authorities call the shots in America. They must be convinced one at a time, and they have been slow to respond.

TIME Career Strategies

Global Internships: The New Key to Getting a Job

Job seekers on their way to meet employers at the 25th Annual CUNY big Apple Job and Internship Fair at the Jacob Javits Convention Center on April 26, 2013 in New York City.
Spencer Platt / Getty Images

As if paying for college wasn't enough, now students are paying to get a high-value internship that will give them an edge in the job market.

The debate over the value of college that billionaire Peter Thiel sparked three years ago hasn’t gone away. Yet most adults continue to place a high priority on saving for college, and a growing number of families are doubling down on education—paying for high-value internships on top of a degree.

Youth unemployment remains high—about 13% globally. Thiel and others argue that it’s foolish to go into debt for a diploma when so few appropriate jobs are available for graduates. Better to start a small business or learn a trade.

Statistics say otherwise. The Pew Research Center found that a typical adult with a bachelor’s degree will earn $1.42 million over 40 years—$650,000 more than someone with only a high school degree. The cost of college and lost income while in school narrows the gap slightly, to $550,000. Pew also found that adults with a college degree fared better in the Great Recession.

There is no denying that crushing student loans may bear on graduates for years, and that those who go into debt but fail to graduate are especially hard pressed. But for most people education works, and the good news is that through online courses the price will come down markedly over the next decade, and may even become free.

So it’s no surprise to see parents and young people continuing to place a high priority on higher education and the pre- or post-graduate internships that boost employment prospects. Among families that have saved anything for college, 85% say it is one of their top three priorities and 60% will save more this year than they saved last year, according to a Fidelity Investments survey. They are saving monthly (81%), or earmarking their tax refund (37%) or a bonus or pay raise (36%), and redirecting funds that had been used for day care or another expiring expense (29%).

On top of this, families have begun budgeting for global internships, a trend that universities and a cottage industry of placement firms has furthered. “The data show that international internships are highly regarded by employers,” says David Lloyd, founder of the Intern Group, which has placed young adults from 80 countries in positions around the world. “The kids who will be successful today are those that take themselves out of their comfort zone and develop a global mindset.”

This means going beyond simple study abroad programs to employment in a foreign country that will build a young person’s contacts and context, Lloyd says. Such programs are especially popular in the U.S., where more than a third of Intern Group alumni reside. Lloyd says that 88% of those who take part in his firm’s programs find work at a graduate level job within three months and that 95% say the program was good for their career.

These internships start at around $3,500 for a six-week program. Some last six months and are more expensive. But, says Lloyd, “employers worldwide prize graduates with global experience and international cultural awareness.” The right internship gives graduates a decided edge.

Hilton Hotels is among companies that prize internships, and at the 2014 World Economic Forum in Davos announced an Open Doors campaign to help 1 million young people “reach their full potential” over the next five years through global apprenticeship and other programs. “These are a huge deal,” says Jennifer Silberman, vice president of corporate responsibility at Hilton Worldwide. “Young people are at a competitive disadvantage if they don’t get this kind of experience.”

Indeed, McKinsey found that half of college graduates are not sure that their education improved their job prospects and that 39% of employers say entry-level jobs go unfilled because young people don’t have the required job skills. An apprenticeship, says Silberman, “lets us identify high-potential workers and fast-track them.” The travel industry is projected to create 73 million jobs the next 10 years, and most of them have career potential, she says, adding that it’s not unusual for an apprentice to be offered a full-time job and then get their first promotion within six months.

You don’t necessarily need a college degree to become a concierge or housekeeping manager, which is kind of the argument Thiel and others make against going into debt to go to college. But even in the services-heavy travel industry there are lots of marketing, technology and management jobs that require higher education—and where a high-value internship really helps.

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