TIME Innovation

Five Best Ideas of the Day: January 7

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

1. In the wake of today’s terror attack on a French satire magazine, the words of its editor, who died in the attack, are worth recalling: “I am not going to hide.”

By Stefan Simons in Spiegel

2. Thrift — not merely saving money but keeping poverty and debt at bay — is an American value worth revisiting.

By Andrew L. Yarrow in the Montgomery Advertiser

3. The poorer parents are, the less likely they are to talk to their kids, which spurs language development. New programs are cropping up to change that.

By Margaret Talbot in the New Yorker

4. Once Uber overwhelms taxis and becomes the dominant car service, regulation is inevitable.

By Eric Posner in Slate

5. A program inviting Kyoto taxi drivers to loiter outside convenience stores at night has reduced robberies by almost half.

By Steven Le Blanc and Masami M. in RocketNews24

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 Savings

Why Illinois May Become a National Model for Retirement Saving

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Chris Mellor—Getty Images/Lonely Planet Image

Illinois will automatically enroll workers who lack an employer retirement plan into a state-run savings program

In what may emerge as a standard for all states, Illinois is introducing a tax-advantaged retirement savings plan for most residents who do not have such a plan at work. The program echoes one that President Obama has endorsed at the federal level, and it boosts momentum that has been building for several years at the state level.

Beginning in 2017, Illinois businesses with 25 or more employees that do not offer a retirement savings plan, such as a 401(k) or pension, must automatically enroll workers in the state’s Secure Choice Savings Program, which will enable them to invest in a Roth IRA. Workers can opt out. But reams of research suggest that inertia will keep most employees in the plan.

Once enrolled, workers can choose their pre-tax contribution rate and select from a small menu of investment options. Those who do nothing will have 3% of their paycheck automatically deducted and placed in a low-fee target-date investment fund managed by the Illinois Treasurer.

The plan may sound novel, but at least 17 states, including bellwethers like California, Connecticut, Massachusetts and Wisconsin, have been considering their own savings plans for private-sector employees. Many are taking steps to establish one. In Connecticut, lawmakers recently set aside $400,000 to set up an oversight board and begin feasibility studies. Wisconsin and others are moving the same direction. Oregon may approve a plan this year.

But Illinois appears to be the first set to go live with a plan, and for that reason the program will be closely watched. If more workers open and use the savings accounts, more states are almost certain to push ahead. The estimate in Illinois is that two million additional workers will end up with savings accounts.

The Illinois plan may serve as a model because there is little cost to the state—that’s crucial at a time when many states face budget problems. (The budget shortfalls in Illinois, in particular, led to a pension crisis.) All contributions come from workers, and employers must administer the modest payroll deduction. Savers will be charged 0.75% of their balance each year to pay the costs of managing the funds and administering the program.

About half of private-sector employees in the U.S. have no access to retirement savings plans at work, which is one key reason for the nation’s retirement savings crisis. Those least likely to have access are workers at small businesses. The Illinois program addresses this issue by mandating participation from all but the very smallest companies.

These state savings initiatives have been spurred by the lack of progress in Washington to improve retirement security. President Obama promoted a federally administered IRA for workers without an employer plan in his State of the Union address last year, but bipartisan bills to establish an automatic IRA have long been stalled in Congress. Still, the U.S. Treasury unveiled a program called myRA for such workers to invest in guaranteed fixed-income securities on a tax-advantaged basis. Clearly, there is broad support for these kinds of programs. Now Illinois just has to show they work.

Read next: 5 Simple Questions that Pave the Way to Financial Security

MONEY Savings

The Financial Resolution that 62% of Americans Really Ought to be Making

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Jonathan Kitchen—Getty Images

A new Bankrate study finds that most of us are missing a key piece of our financial well-being: emergency savings.

It’s not just your body you should be resolving to get fit this year.

Look beyond the mirror and into your savings account. If it’s as lean as you wish your figure was, know that you’re in a troubling majority.

Only 38% of Americans have enough money in their savings accounts to pay for unexpected expenses such as a $1,000 emergency room visit or a $500 car repair, according to a report by Bankrate.com released Wednesday.

Who’s Prepared and Who’s Not

Unsurprisingly, the Bankrate report found that the likelihood of having savings increased with one’s age, education level, and income.

Only 33% of millennials surveyed had sufficient savings to pay for either of the expenses noted earlier, compared to 44% of senior citizens. Another study, released Monday by GOBankingRates, also found that Gen Y-ers were the least likely age group to be saving for an emergency.

In the Bankrate survey, those with household incomes above $75,000 were most likely to have sufficient savings to cover unexpected expenses, with 62% prepared.

And according to the GOBankingRates poll, women are 16% more likely than men to be saving for emergencies.

What’s especially troubling about the Bankrate results is that for many Americans the $1,000 and $500 figures in the survey are far less than the minimum of three to six month’s worth of living costs financial planners recommend people have in emergency savings. That means that even more than 62% of people are unprepared for a big crisis like a job loss.

Will You Shore Up Your Reserves in 2015?

Many Americans seem to have overlooked this vital part of their financial health when setting goals for this year.

Less than a third of us even made financial resolutions for 2015, according to a study by Fidelity. Of those who did, saving more was the top goal, but most intended those increased savings to be funneled to retirement or college savings accounts.

While saving for longer-term goals is important, it’s even more important that you have enough squirreled away so that if you face a financial hardship you don’t have to go into debt—which is why building emergency savings should be among your top priorities.

Luckily, fattening up these savings will require less sweat than losing weight.

First step: Set up an FDIC-insured savings or money-market account independent of your regular checking and savings for your emergency fund so that you avoid the temptation to spend those funds. (Finding an account that pays above average interest can help you grow your savings faster, so check out Money’s Best Banks for our picks.)

Start with a goal of putting away three months’ worth of non-discretionary expenses, such as health insurance, utilities, rent or mortgage, and food. Divide by 12 and automate that much to be transferred from your checking to savings each month.

Depending on your type of job, your household expenses, and whether you are the sole breadwinner, you may need to increase the amount in your account to cover six to nine month’s worth of costs.

But don’t stress about that for now; that’s what 2016 is for.

Need help finding more in your budget to save? See our guide on how to make saving easier.

More on resolutions from Money.com:

MONEY Savings

Why a New Year’s Resolution to Save More May Actually Work

piggy bank in confetti
Benne Ochs—Getty Images

The economy is up, and New Year's Resolutions are on the decline. Too bad, because making a financial commitment can really help you reach your goals.

Most New Year’s resolutions are pointless. Only one in 10 people stick with them for a year, and many folks don’t last much more than a month. But as 2015 approaches, you might consider a financial New Year’s resolution anyway. Those who resolve to improve their money behavior at the start of the year get ahead at a faster rate than those who do not, new research shows.

Among those who made a financial resolution last year, 51% report feeling better about their money now, according to a new survey from Fidelity Investments. By contrast, only 38% of those who did not make a money resolution said they felt better.

Meanwhile, New Year’s financial resolutions seem to be easier to stay with: 42% find it easier to pay down debt and save more for retirement than, say, lose weight or give up smoking. Among those who made a financial resolution last year, 29% reached their goal and 73% got at least half way there, Fidelity found. Only 12% of resolutions having to do with things like fitness and health do not end in failure, other research shows.

So it is discouraging to note that the rate of people considering a New Year’s financial resolution is on the decline: just 31% plan to make one this year, down from 43% last year. A fall financial pulse survey from Charles Schwab is slightly more encouraging: 36% say they want to get their finances in order and that working with a financial planner would most improve their life. But a bigger share say they are most concerned with losing weight (37%) and would like to work with a trainer (38%). Topping the financial resolutions list in the Fidelity survey, as is the case nearly every year, are saving more (55%), paying off debt (20%) and spending less (17%)—all of which are closely connected. The median savings goal is an additional $200 a month.

Why are financial resolutions on the decline? The stock market has been hitting record highs, unemployment has dipped below 6% and the economy is growing at its fastest pace in years. So the urgency to tighten our belts felt during the Great Recession and immediate aftermath may be lifting.

But no matter how much the economic climate has improved, Americans remain woefully under saved for retirement and paying off debt is almost always a smart strategy. In the Schwab survey, 53% said if they were given an unexpected gift this year their top choice would be cash to pay down credit cards. One key to sticking to your New Year’s pledge: track progress and check in often. Two-thirds of those who set a goal find progress to be motivating, Fidelity found. That’s true whether you are trying to lose 20 pounds or save $20 a week.

More on saving and budgeting from Money 101:

How can I make it easier to save?

How do I set a budget I can stick to?

Should I save or pay off debt?

MONEY Pensions

What Retirees Need to Know about the New Federal Pension Rules

Only a small percentage of retirees are directly affected by the new rule. But future legislation may lead to more pension cutbacks.

The last-minute deal to allow retiree pension benefit cuts as part of the federal spending bill for 2015 passed by Congress last week has set off shock waves in the U.S. retirement system.

Buried in the $1.1 trillion “Cromnibus” legislation signed this week by President Barack Obama was a provision that aims to head off a looming implosion of multiemployer pension plans—traditional defined benefit plans jointly funded by groups of employers. The pension reforms affect only retirees in struggling multiemployer pension plans, but any retiree living on a defined benefit pension could rightly wonder: Am I next?

“Even people who aren’t impacted directly by this would have to ask themselves: If they’re doing that, what’s to stop them from doing it to me?” says Jeff Snyder, vice president of Cammack Retirement Group, a consulting and investment advisory firm that works with retirement plans.

The answer: plenty. Private sector pensions are governed by the Employee Retirement Income Security Act (ERISA), which prevents cuts for retirees in most cases. The new legislation doesn’t affect private sector workers in single-employer plans. Workers and retirees in public sector pension plans also are not affected by the law.

Here are answers to some of the key questions workers and retirees should be asking in the legislation’s wake.

Q: Cutting benefits for people who already are retired seems unfair. Why was this done?

A: Proponents argue it was better to preserve some pension benefit for workers in the most troubled plans rather than letting plans collapse. The multiemployer plans are backstopped by the Pension Benefit Guaranty Corp (PBGC), the federally sponsored agency that insures private sector pensions. The multiemployer fund was on track to run out of money within 10 years—a date that could be hastened if healthy companies withdraw from their plans. If the multiemployer backup system had been allowed to collapse, pensioners would have been left with no benefit.

Opponents, including AARP and the Pension Rights Center, argued that cutting benefits for current retirees was draconian and established a bad precedent.

Q: Who will be affected by the new law? If I have a traditional pension, should I worry?

A: Only pensioners in multiemployer plans are at risk, and even there, the risk is limited to retirees in “red zone” plans—those that are severely underfunded. Of the 10 million participants in multiemployer plans, perhaps 1 million will see some cuts. The new law also prohibits any cuts for beneficiaries over age 80, or who receive a disability pension.

Q: What will be the size of the cuts?

A: That is up to plan trustees. However, the maximum cuts permitted under the law are dramatic. Many retirees in these troubled plans were well-paid union workers who receive substantial pension benefits. For a retiree with 25 years of service and a $25,000 annual benefit, the maximum annual cut permitted under the law is $13,200, according to a cutback calculator at the Pension Rights Center’s website.

The cuts must be approved by a majority of all the active and retired workers in a plan (not just a majority of those who vote).

Q: How do I determine if I’m at risk?

A: Plan sponsors are required to send out an annual funding notice indicating the funding status of your program. Plans in the red zone must send workers a “critical status alert.” If you’re in doubt, Snyder suggests, “just call your retirement plan administrator,” Snyder says. “Simply ask, if you have cause for concern. Is your plan underfunded?”

The U.S. Department of Labor’s website maintains a list of plans on the critical list.

Q: How quickly would the cuts be made?

A: If a plan’s trustees decide to make cuts, a notice would be sent to workers. Snyder says implementation would take at least six months, and might require “a year or more.”

Q: Am I safe if I am in a single employer pension plan?

A: When the PBGC takes over a private sector single employer plan, about 85% of beneficiaries receive the full amount of their promised benefit. The maximum benefit paid by PBGC this year is $59,320.

Q: Does this law make it more likely that we’ll see efforts to cut other retiree benefits?

A: That will depend on the political climate in Washington, and in statehouses across the country. In a previous column I argued that the midterm elections results boost the odds of attacks on public sector pensions, Social Security and Medicare.

Sadly, the Cromnibus deal should serve as a warning that full pension benefits aren’t a sure thing anymore. So having a Plan B makes sense. “If you have a defined benefit pension, great,” Snyder says. “But you should still be putting money away to make sure you have something to rely on in the future.”

Read next: This Is the Toughest Threat to Boomers’ Retirement Plans

MONEY retirement planning

What Scrooge Can Teach You About Retirement Planning

Scrooge in A Christmas Carol
© Walt Disney Co.—Courtesy Everett Collection Scrooge in "A Christmas Carol"

Sure, he was tight-fisted. But Scrooge's money habits are a useful model for reaching your retirement goals.

I can hear the cries of outrage already. How can A Christmas Carol‘s Scrooge, the character Charles Dickens described as tight-fisted, squeezing, wrenching, grasping, scraping, clutching and covetous, possibly be a paragon of retirement planning? Bah humbug! If anything, he’s a role model for how not to live one’s life!

And I agree, up to a point. But if you’re willing to overlook a few of his, shall we say, flaws, good old Scrooge also possessed some qualities that make him a pretty decent role model for achieving a secure and meaningful retirement. Here are three we may well to emulate, albeit in moderation, to improve our retirement outlook.

1. Scrooge had a phenomenal work ethic. When the novel opens, Scrooge is at work in his counting-house late in the afternoon on Christmas eve. He didn’t duck out early to do some last-minute shopping. He wasn’t posting Happy Holidays photos on Instagram. He was putting in a full day’s work.

Granted, in recent years millions of people who would like to do just that haven’t had the option. Perhaps the recent upbeat employment report signals a more vibrant jobs market ahead. But the fact remains that the commitment to work that Scrooge displays is crucial to a successful retirement for two reasons: you can’t build a nest egg without regular income; and the amount you earn and number of years on the job largely determine the size of a key source of retirement income: your Social Security benefit.

Note too that Scrooge was still working relatively late in life. Dickens doesn’t give Ebenezer’s age, but many people estimate he was in his late 50s or 60s, which is getting up there considering life expectancy in mid-19th century England was about 40. So we can take a cue from Scrooge on this score as well. For example, in their new book Falling Short: The Coming Retirement Crisis and What To Do About It, authors Alicia Munnell, Charles Ellis and Andrew Eschtruth point out that just a few extra years on the job can go a long way toward improving one’s retirement prospects. And if that doesn’t do the trick, you can always supplement your income by working in retirement.

2. The man was a prodigious saver. Scrooge definitely knew a thing or two about saving a buck. And he didn’t resort to gimmicks like apps that round up credit card purchases to the nearest dollar and deposit the difference in an investing account, giving you the impression you’re saving while encouraging spending. He did it the old-fashioned way by keeping his everyday living expenses down.

He went way, way too far, of course, what with living in the dark, keeping a very small fire and eating gruel from a saucepan. But he had the right idea—namely, if you live below your means by not splurging on over-the-top vacations, expensive cars and big houses with mortgage payments to match, you’ll have a better chance of saving the 15% a year that can lead to a comfy retirement. And while Dickens doesn’t get into Scrooge’s investing habits, my guess is that ol’ Ebenezer wouldn’t fall for pitches for dubious or expensive investments. I think he’d be an index-fund kinda guy who realizes that reducing investment fees boosts the size of your nest egg and the amount of income you can draw from it.

3. Scrooge (eventually) understood what really matters. This may very well be the most important lesson we can draw from Scrooge. Sure, it took visits from his dead business partner Marley and a few ghosts to transform him. But by the end of the novel, Scrooge has morphed from a pinched and selfish man into a generous and compassionate person who anonymously sends a turkey to the Cratchit home for Christmas dinner and becomes like a second father to Bob Cratchit’s son, Tiny Tim. In short, he realizes that wealth brings happiness only when we share it with our families and others in ways that improve all our lives.

So while it’s important to focus on making good financial decisions, we should never forget that retirement planning isn’t just about the bucks. Ultimately, it’s about creating a retirement lifestyle that has meaning and purpose as well as financial security.

So if your thoughts happen to stray to your retirement over this holiday season and you find yourself wondering how you might improve your planning, ask yourself WWSD—What Would Scrooge Do? Whether it’s the stingy Ebenezer or the more benevolent version, he just might provide the inspiration you need.

Walter Updegrave is the editor of RealDealRetirement.com. If you have a question on retirement or investing that you would like Walter to answer online, send it to him at walter@realdealretirement.com.

More from RealDealRetirement.com:

How To Invest In Today’s Topsy-Turvy Market—And In The Year Ahead

What’s Your “Magic” Retirement Number?

Does Uncle Sam Want To Contribute $2,000 Toward Your Retirement?

MONEY Debt

The Unknown Debt That’s Dragging Down Your Credit Score

pile of pills in dark lighting
Science Picture Co—Getty Images

A new report from the Consumer Financial Protection Bureau finds that 52% of all debt on credit reports is medical debt.

Even if you carry no debt on your credit card and pay your mortgage every month, another kind of debt might be ruining your credit: medical debt.

Almost 43 million Americans have overdue medical debt dragging down their credit, according to a new report from the Consumer Financial Protection Bureau. But 15 million of those people, by CFPB estimates, have no other dings on their credit. And debt collection agencies pursue fairly small medical debts: The average medical debt on a credit report is $579, and the median is just $207.

The scariest part? You may not know that you have a problem. “Many, many people don’t even know they have a bill—much less that it’s affecting their credit score,” says Christina LaMontagne of NerdWallet.

The CFPB attributes part of the problem to a debt collection practice called “parking.” The federal agency says some debt collectors will ding the consumer’s credit before even notifying the consumer that there’s an outstanding medical bill. “Parking” the debt where it can do the most damage motivates the person to pay it off quickly. Sometimes insurers ultimately pay the costs—after a consumer’s credit may have already suffered.

“This is viewed by some collectors as a way to minimize costs, but it is not how the system is supposed to work,” CFPB director Richard Cordray explained in a statement announcing the report. “And the collection process should not depend on harming consumers by adverse reporting before a consumer even learns she owes a medical debt. If it takes a drop in her credit score or an adverse action notice to make the point, then even more damage has been done to her financial standing.”

Even if debt collectors haven’t “parked” medical debt on your credit report, medical bills can be a vexing problem. Patients often struggle to learn the cost of their health care beforehand and understand their bills after the fact, LaMontagne says. A NerdWallet study found that 63% of Americans say they’ve received unexpectedly high medical bills. And bills are often wrong: In an audit of Medicare claims, NerdWallet found that 49% contained errors, resulting in an average 23% overcharge.

As a result, one in five Americans may be contacted by a collection agency about medical debt this year, by NerdWallet’s estimate. That’s why all consumers should be on guard. Here’s what to do to keep it from happening to you.

Control costs

Of course, the best way to avoid debt is to keep expenses low at the outset. But with medical costs, that’s easier said than done. The most important thing? Stay in network.

“Most of the very high charges I see are for people who inadvertently saw out-of-network providers,” LaMontagne says. “Print out the statement that says this doctor is in network and have that to protect yourself down the line.”

Also, if you know you’ll need a procedure like an MRI, shop around first. “Leverage price transparency tools whenever possible,” LaMontagne says. “People do see huge variations in prices.”

Save for high deductibles

While the Affordable Care Act has provided health insurance to an additional 10 million people, most Americans still get health coverage from their employers, and employers have been steadily raising deductibles, LaMontagne says. That means many consumers have to pay much more out of pocket before insurance covers the bulk of their costs. So more Americans may be hit with unexpectedly high bills.

But that doesn’t mean high-deductible plans are bad, LaMontagne is quick to add. It just means people with these plans need to shop around for procedures and budget for health care expenses by setting aside money in tax-advantaged savings accounts like a health savings account (HSA).

Ask for an itemized bill

“It’s really hard to read a straight bill as they usually come in the mail,” LaMontagne says. Luckily, you’re entitled to an itemized one.

When you get it, look for doctors and procedures you don’t recognize. Compare the bill against your explanation of benefits from your insurer to see if your insurance has been applied correctly.

If you think there’s a serious billing error, “call the doctor or call the insurance as your first line of defense,” LaMontagne says. But when all else fails, you can seek help from a professional medical bill advocate.

Check your credit report

Once a year, you’re entitled to a free credit report from each of the three credit bureaus: Experian, Trans­Union, and Equifax. So check every four months. Go to annualcreditreport.com to request your report. If you find an error, submit a dispute with the credit bureau.

Pay it off quickly

The good news: Fair Isaac, the company that creates FICO credit scores, announced earlier this year that medical debt will no longer drag down your credit score after it’s been paid off. Consumers with median credit scores and no other debt can expect to see their FICO score increase 25 points after paying off an overdue medical bill that’s been sent to collections.

So tackle medical debt quickly—it can make a big difference.

Read more:

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