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Higher Education Cost Inflation Helps Lead to Legitimizing of MOOCs

Almost 40 percent of high school graduates accepted for college admission ultimately do not attend the following year. The reason? College is expensive: The average college graduate emerged with about $30,000 in student loans in 2015.1

So you’ve got to wonder, is it worth it to graduate with that much debt, especially these days when job security can be a challenge? Parents all over America may ask themselves this question. After all, for decades a college education has been considered the key to getting a good job and pursuing an upper-middle-class lifestyle. But with stagnant wages, many college students may not find jobs that pay enough to cover those student loans while still paving the way for their financial future.

Thankfully, there is a movement to open up access to college education. One online education phenomenon that has exploded in popularity since 2011 is the MOOC, or “massive open online course.” They started out being free, short courses available to anyone with access to the internet. Today, many prestigious universities offer these courses, including Caltech, Harvard, MIT, Stanford, Oxford and the Sorbonne.2

With such widespread, even global, acceptance, many in education are pondering whether MOOCs offer a solution to two common problems with our higher education system: access and cost. Today, 93 percent of the global population lacks the ability to receive a higher education for geographic or economic reasons, and MOOCs can help to avoid conflict with both.3

There are several reasons why college tuition has increased so much. One is that individual states used to cover up to two-thirds of state-funded university budgets. Now they cover only about half, which means parents, students and student loans must cover that deficit. A second reason is that more money is allocated to pay for non-academic staff at colleges and universities; twice as much as in the past. A big part of that represents what many believe to be unreasonably high compensation for top university administrators, especially relative to what professors are paid.4

This may be why MOOCs have become so popular in recent years; there is less administrative and bureaucratic involvement in these courses. Between 2015 and the end of 2016, the number of users who registered for at least one massive open online course grew from 35 million to 58 million worldwide.5 More than 700 universities now offer 6,850 online courses, with business and technology being the most popular subjects. In fact, what started out as a free education movement has now added paid certificate and degree programs. This shift in business model is beginning to redefine MOOCs’ role in the education marketplace.6

Even campus-based colleges have joined the online education bandwagon. Today, most courses comprise online and classroom lectures; face-to-face and Facetime meetings with professors; online interactions with instructors and classmates for study sessions and projects; social media discussions and other web-related activities.7

As for the implications of completing a degree online, what was once a heavy stigma may be changing as more employers get their own experiences with online coursework. In fact, research has found that many online graduates from respected brick-and-mortar universities have the same chances of finding a job, getting a raise or being promoted as students who earned their degree on campus.8

Of course, any education technology, innovation or tool will have its own set of drawbacks and limits. However, it is promising to see universities adjusting the traditional model to help make college more affordable and accessible. Whether your child or grandchild prefers a traditional college education or is open to nontraditional types like MOOCs, we can help you create strategies utilizing insurance products to help put college within financial reach.

Content prepared by Kara Stefan Communications

1 Robert Ubell. IEEE Spectrum. Jan. 23, 2017. “Can MOOCs Cure the Tuition Epidemic?” http://spectrum.ieee.org/tech-talk/at-work/education/can-moocs-cure-the-tuition-epidemic. Accessed Jan. 31, 2017.

2 Rosamond Hutt. We Forum. Dec. 13, 2016. “You can now take a course at the world’s best universities for free.” https://www.weforum.org/agenda/2016/12/you-can-now-take-a-course-at-the-world-s-best-universities-for-free-here-s-how-that-happened. Accessed Jan. 31, 2017.

3 Diane Luckow. Simon Frazier University. Jan. 3, 2017. “SFU MOOC a new route for students.” https://www.sfu.ca/sfunews/stories/2017/sfu-mooc-new-route-for-students.html. Accessed Jan. 31, 2017.

4Robert Ubell. IEEE Spectrum. Jan. 23, 2017. “Can MOOCs Cure the Tuition Epidemic?” http://spectrum.ieee.org/tech-talk/at-work/education/can-moocs-cure-the-tuition-epidemic. Accessed Jan. 31, 2017.

5 Natalie Marsh. The PIE News. Jan. 4, 2017. “MOOC users reach 58 million globally.” https://thepienews.com/news/edu-tech/mooc-users-reach-58-million-globally/. Accessed Jan. 31, 2017.

6 Ibid.

7 Robert Ubell. IEEE Spectrum. Jan. 30, 2017. “What Do Employers Really Think About Online Degrees?” http://spectrum.ieee.org/tech-talk/at-work/education/what-do-employers-really-think-about-online-degrees. Accessed Jan. 31, 2017.

8 Ibid.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.


U.S. Housing Market Update

The 30-year fixed mortgage rate rose from 3.5 percent to 4.25 percent after the presidential election. While higher rates might deter potential homebuyers — particularly young first-timers — residential real estate is expected to continue being a seller’s market throughout 2017.1

Meanwhile, the fate of Fannie Mae and Freddie Mac remains unclear. These government-sponsored enterprises have been managed by a federal agency since the housing slump in 2008. Trump’s pick for Treasury secretary, Steven Mnuchin, has indicated that his top priority is to privatize these mortgage giants.2

The real estate market bodes particularly well for retirees who have paid off their mortgage. While many retirees prefer to stay put in their longtime homes, it may be worth considering downsizing to a smaller place that is easier to maintain. Today’s market provides a wide range of potential homebuyers willing to pay top dollar for homes in areas with low inventory.3

Many retirees looking to downsize are in the same boat as other homebuyers: Plenty of motivation but not enough options from which to choose. In this situation, many are considering new construction, including the lower-cost “tiny house” trend.4

Those in the market for a new home can even custom build a smaller home designed to make life easier as they age, featuring no stairs, wide hallways, easily accessed storage areas and some of the new smart-home technological conveniences to help them stay in touch with loved ones.5

For those who haven’t retired, or aren’t prepared to downsize just yet, one possibility may be purchasing a smaller home now and using it for rental income until they’re ready.6

Be sure to consult with a professional real estate agent or broker to help decide what’s best for your unique situation.

Content prepared by Kara Stefan Communications

1 Diana Olick. CNBC. Dec. 13, 2016. “How rising mortgage rates may not matter for housing.” http://www.cnbc.com/2016/12/13/how-rising-rates-may-not-matter-for-housing.html. Accessed Feb. 8, 2017.

2 Holden Lewis. Bankrate.com. 2017. “What’s in store for housing market in 2017?” http://www.bankrate.com/finance/mortgages/housing-trends-1.aspx. Accessed Jan. 24, 2017.

3 Yuqing Pan. Realtor.com. Jan. 16, 2017. “Sold Out: These 10 U.S. Cities Have the Biggest Housing Shortages.” http://www.realtor.com/news/trends/top-10-housing-markets-constrained-by-tight-inventory/. Accessed Jan. 24, 2017.

4 Kiplinger. 2017. “10 Great Tiny Homes for Retirees.” http://www.kiplinger.com/slideshow/retirement/T010-S001-great-tiny-homes-for-retirees/index.html. Accessed Jan. 24, 2017.

5 TD Bank. Realtor.com. Sept. 18, 2015. “Is New Construction for You?” http://www.realtor.com/advice/buy/is-new-construction-for-you/. Accessed Jan. 24, 2017.

6 Bankrate. Aug. 2, 2016. “Funding retirement with rental income.” http://www.bankrate.com/finance/retirement/funding-retirement-with-rental-income-1.aspx. Accessed Feb. 22, 2017.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

AE02175017B


Prescription for Retail Therapy

How much do you use of what you buy? Research reveals that Americans throw away 30 percent to 40 percent of the food they purchase.1 That’s just food, most of which you see daily and toss out regularly as it goes bad. But what about the things that don’t go bad — the sports equipment in the hall closet, the coat you bought for one trip or the shoes you love but never wear?

Why do we buy so much?

Maybe it’s because shopping carts are bigger. That’s right; today’s average shopping cart is three times as big as when they were first introduced in 1938.2 Here’s another interesting tidbit: Customers buy more impulse items when they grab a handheld shopping basket instead of a cart.3 Perhaps that’s because we go into a store knowing we want only one or two items but get a higher sense of fulfillment if we add just one or two more to the basket — because there’s room, and we can.

Retailers conduct research on how to encourage consumers to spend more money. There’s an entire industry devoted to studying shopping habits. Therefore, the more you know, the better you can identify retail traps. It’s not that you shouldn’t buy things; it’s that you shouldn’t buy things you don’t want or need, so it’s good to identify when you’re about to fall into a retailer’s trap. After all, the less you buy, the more you save. And the more you save, the better we can help you explore ways to create a retirement income strategy that you can have confidence in.

One nice perk some stores offer is a place to sit and rest. It’s good for bored children, patient spouses and weary shoppers laden with packages. But you should know that some stores, such as IKEA, set up displays of items that aren’t selling that well near these sitting areas.4 Apparently, staring at an item long enough while in repose can trigger an interest in buying it.

Some people use shopping like comfort food, as a way to temporarily make them feel better after a bad day or stressful situation. This is affectionately called “retail therapy.”5 In fact, studies show that about 62 percent of Americans tend to self-soothe by shopping. Scientists say we feel better because our brain releases a chemical called dopamine when we encounter something novel or exciting. However, it’s worth mentioning that dopamine levels spike higher when you anticipate making a purchase, and lower after you’ve made it.6 In other words, you can get a good feeling by shopping but not always when making a purchase. Good to know.

It’s also interesting to note the difference between impulsive shopping and compulsive shopping. Impulsive is shopping or buying on a whim, whereas compulsive is more planned out and designed to accomplish a goal, if only to feel better. Compulsive shoppers are more likely to get into financial trouble by shopping too much or too often.7 Interestingly, people tend to shop more compulsively when they are with friends as opposed to relatives.8 This could be indicative of shopping for approval or to fit in with your friends, versus trying not to be judged by your relatives.

 

Content prepared by Kara Stefan Communications

1 United Nations Environment Programme. 2017. “Food Waste: The Facts.” http://www.worldfooddayusa.org/food_waste_the_facts. Accessed Jan. 16, 2017.

2 Ali Newton. Display Centre. Dec. 14, 2016. “5 Display Tricks Supermarkets Use To Sell More.” http://displaycentre.co.uk/5-tricks-supermarkets-use-sell-blog/. Accessed Jan. 16, 2017.

3 Ibid.

4 Quentin Fottrell. MarketWatch. Dec. 10, 2016. “10 Psychological Retail Tricks That Make You Spend More Money.” http://www.marketwatch.com/story/10-retail-tricks-that-make-you-spend-more-2013-12-04. Accessed Jan. 16, 2017.

5 Marianna Glynska. The Huffington Post. May 10, 2016. “Going Shopping: Stress Relief or Necessary Burden?” http://www.huffingtonpost.com/marianna-glynska/going-shopping-stress-rel_b_9875532.html. Accessed Jan. 16, 2017.

6 Paula Cookson, LCSW. Inpathy Bulletin. Dec. 21, 2016. “Retail Therapy.” http://insightbulletin.com/retail-therapy/. Accessed Jan. 16, 2017.

7 Elizabeth Hartney, PhD. VeryWell.com. Apr. 18, 2016. “Compulsive vs. Impulsive Shopping.” https://www.verywell.com/difference-between-compulsive-and-impulsive-shopping-22336. Accessed Jan. 16, 2017.

8 Tomas Chamorro-Premuzic. The Guardian. Nov. 26, 2015. “The Psychology of Impulsive Shopping.” https://www.theguardian.com/media-network/2015/nov/26/psychology-impulsive-shopping-christmas-black-friday-sales. Accessed Jan. 16, 2017.

 

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

 

 

Take a Look at Life Insurance

Middle-aged adults have a plethora of middle-aged financial priorities. It’s hard to even call them priorities because each one is important; it’s just a matter of spreading the money you have across a variety of different needs.

In fact, a typical mid-life checking account might include payouts for a mortgage, college tuition, a savings account, an IRA, a life insurance policy, and a long-term care insurance policy — and that’s not even including the 401(k) contribution that is taken out of a paycheck before it gets deposited.

If you struggle with trying to figure out which financial priorities are most important or how to allocate a portion of your retirement savings among the many insurance product options, we can help. In fact, there are insurance products that can help with multiple priorities so you don’t have to spread your assets so thin.

Take life insurance, for example. There are many different kinds, and one of the main differences is between term and whole life. With a term policy, you purchase a death benefit amount and determine how long you want to hold the policy; it doesn’t pay out anything unless the owner passes away during the term. Whole life features a cash value account, which, over time, can build up a balance you can access, if needed.1

First and foremost, life insurance is there to help take care of your loved ones if you pass away. While many employers provide some life insurance coverage for employees, it may not be enough to avoid the long-term hardship of that loss of income. However, less than 40 percent of Americans have an interest in life insurance at all. It actually comes in seventh in terms of most people’s financial priorities.2

While a term life policy offers a death benefit for the selected term, a whole life policy can provide a death benefit that covers your entire life, as long as you keep paying the premiums. It’s worth mentioning that older policies may actually mature when the policy owner turns 100 and will pay out the death benefit while he or she is still alive. Newer policies, however, extend to a maximum age of 121.3

A whole life policy also offers certain tax advantages. While premiums may not be tax deductible, the cash value grows tax deferred, and distributions through the use of policy loans are generally tax free. The cash value can be accessed if the owner needs emergency funds or money to supplement his or her retirement income or it can even be used to pay the annual premiums on the policy.4 This is all in addition to the death benefit. Please note that withdrawals or policy loans of any type may reduce available cash values and death benefits and may cause the policy to lapse, or affect guarantees against lapse. Additional premium payments may be required to keep the policy in force.


Content prepared by Kara Stefan Communications

1 Amy Danise. NerdWallet. Jan. 5, 2017. “Life Insurance Explained in (Exactly) 250 Words.” https://www.nerdwallet.com/blog/insurance/life-insurance-explained-250-words/. Accessed Feb. 6, 2017.

2 BestLifeRates.org. Dec. 28, 2016. “2015 Life Insurance Statistics and Facts.” https://www.bestliferates.org/blog/2015-life-insurance-statistics-and-facts/. Accessed Jan. 10, 2017.

3 Michael Kitces. Nerd’s Eye View. March 2, 2016. “The Age-100 Tax Problem With Outliving the End of Life Insurance Mortality Tables.” https://www.kitces.com/blog/outliving-the-end-of-life-insurance-mortality-tables-the-age-100-tax-problem-when-life-insurance-expires/. Accessed Jan. 10, 2017.

4 Amy Bell. Investopedia. Aug. 21, 2014. “6 Ways To Capture The Cash Value In Life Insurance.” http://www.investopedia.com/articles/personal-finance/082114/6-ways-capture-cash-value-life-insurance.asp. Accessed Feb. 24, 2017.

 

Life insurance policies are contracts between you and an insurance company. Guarantees and protections provided by insurance products are backed by the financial strength and claims-paying ability of the issuing insurer.

 

The content provided in this newsletter is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor or attorney.

 

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.


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