Why Millennials aren’t feeling the boom in household wealth

Households are wealthier than ever. But if you’re a Millennial or have a low credit score, you probably don’t feel any richer.

Since the financial crisis, home equity has grown for older Americans as home prices have recovered and debt has accumulated more slowly, according to a study by the Federal Reserve Bank of New York released Thursday.

But younger people and borrowers considered less creditworthy haven’t reaped the same benefits. Homeownership has declined for these Americans because of tighter lending standards.

The Fed study examined home equity between 2006 and 2017.

In 2006, before the crisis, Americans over age 60 and under age 45 each held about a quarter of the country’s overall home equity.

But by 2017, older Americans held 41% and younger Americans just 14%. That’s partly because of the aging population, but also because of tougher mortgage standards and higher student loan debt, the researchers said.

Related: Almost half of US families can’t afford basics like rent and food

“Tight credit can limit the scope for renters to become owners and for current homeowners to access their equity,” said Beverly Hirtle, executive vice president and director of research at the New York Fed.

The shift in housing wealth distribution could have long-term effects on the nation’s housing cycle, the New York Fed researchers warned. It also leaves far less cushion for those younger Americans or low-credit-score borrowers in harder financial times.

In times of hardship, homeowners can use a portion of the equity they’ve accumulated in their homes to bridge financial shortfalls. Equity is the difference between the value of your home and how much you owe on your mortgage.

Related: It’s really tough to be a homebuyer in Seattle

“The distribution is important, as it reflects who will likely bear the burden when the next economic downturn occurs,” Hirtle said.

The findings were part of the New York Fed’s household debt report, which showed that American households carried $13.21 trillion in debt in the first quarter, up 0.5% from the fourth quarter of last year.

Americans are also doing a better job paying off credit card balances, and the delinquency rate of their mortgages has continued to improve, according to the report.

CNNMoney (Washington)
First published May 17, 2018: 4:10 PM ET


Alzheimer’s Link Leads to More Financial Planning – By Simon Constable

Researchers look at how growing awareness of genetics and disease can affect financial plans.

People whose families have a history of Alzheimer’s disease are much more likely to seek expert financial advice and are more likely to delay retirement, compared with people for whom Alzheimer’s isn’t an issue, says a forthcoming study from professors at the University of Utah.

Cost concerns arising from Alzheimer’s disease, which can require years of institutionalized care, are pushing individuals to plan more, according to the study, which was sponsored by the National Institute on Aging.

People in the study whose families had a history of Alzheimer’s were 86% more likely to have seen a financial professional, and 40% less likely to plan to retire before 65 years of age, compared with people whose families had no history of Alzheimer’s.

The study, which has been submitted to American Journal of Alzheimer’s disease & Other Dementias, states that care for Alzheimer’s patients is costing the patients or their families’ on average $56,290 a year, based on data from 2010. The number of Alzheimer’s patients, meanwhile, is expected to triple to 13.8 million by 2050 compared with five years ago.

Cathleen Zick, a professor of family and consumer studies at the University of Utah and one of three authors of the study, says everyone needs a realistic estimate of what they will need for retirement and a plan to help them meet those needs—especially people with potentially serious health concerns.

“People with low confidence about their financial situation in retirement,” she says, “should be proactive and that would be a sea change in our culture.”

Additional reports by Prof. Zick and her Utah colleagues, Robert Mayer and Ken Smith, look at the links between financial concerns and growing public awareness about genetic links and disease.

A report by the authors that was published in July in the Journal of Aging and Health found that people whose parents have a history of cancer or cardiovascular disease are less optimistic about their own financial prospects in retirement. “It is likely that the link between family health histories and retirement confidence will intensify,” that report says.

The same authors also found that there was at least some level of denial regarding financial planning among women with a family history of breast cancer.

In a study published earlier this year by the online journal Psycho-Oncology, Prof. Zick says focus-group interviews found that such women exhibited a “live-for-today attitude” that doesn’t lend itself to long-term goals like financial planning.


Mr. Constable is a New York-based writer. He can be reached at reports@wsj.com.


Tuition Due? Time to Hit Up Everyone You Know – By Andrew Blackman

Crowdsourcing allows students to raise part of the money with a little help from their friends.

When Gabriela Riquelme missed out on an expected scholarship and found herself $1,700 short on her tuition for the fall semester at University of Alaska Anchorage, she turned to an option that is growing in popularity among cash-strapped college students: crowdfunding.

Crowdfunding first became known as a way for independent artists, filmmakers and others to raise money for their projects by persuading a large number of people to make small donations through the Web. Then it caught on as a way to help launch small businesses. It is now being used for a wide variety of more personal needs, including paying for college.

Students short on tuition use crowdfunding sites to post information about their situation and blast out an appeal through social media, sometimes using tools on the site. Typically there are fees charged to the person raising the money. But each site tries to make it easy for the user to reach a lot of people at once and to manage the payments.

Indeed, with college tuition costs rising so quickly, crowdfunding has an important role to play, says Craig Lemoine, associate professor of financial planning at the American College of Financial Services in Bryn Mawr, Pa. “It may not have taken a village to send someone to college in 1970, but in 2015 it does,” he says. “Having a convenient way of asking friends and family to help is very important.”

On one popular site, GoFundMe, the education category has grown to more than 160,000 campaigns so far this year, from 135 in 2010; donations for 2015 through September have soared to $27.3 million, up from $16,493 for 2010.

The crowdfunding site Indiegogo has seen such an uptick in tuition funding, says chief executive Slava Rubin, it launched a new service last December, Indiegogo Life (recently renamed Generosity), designed for education and other “personal” causes.

Ms. Riquelme, now in her fourth year at University of Alaska, didn’t have high hopes for her own campaign. “I didn’t think my situation was severe enough,” she says. “I went into this not really expecting anything. I thought it would just be a few donations from a couple of my friends and their parents.”

But with only a couple of days left to pay her tuition, she decided to create a profile on GoFundMe. She posted a photo, briefly described her situation, suggested donation amounts, from $5 to $20, then sent the link to some friends through email and Facebook.

To her surprise, the first donation was for $50. After that, things began to snowball, as former high-school teachers and parents of her friends not only donated but encouraged their friends to donate.

“Once I put it out there, it kind of took a life of its own,” says Ms. Riquelme. Even people who couldn’t donate sent messages of support. “It was really incredible to see the feedback,” she says. “I wasn’t expecting that.” She met her $1,700 goal in just two days.

Limits and Fees

For students looking to raise some tuition money on crowdfunding sites, experts advise that they realize the limits. Yes, crowdfunding can be useful to fill gaps in funding, but no one should rely on it as their primary way of paying for college. “The average campaign raises about $1,000,” says Salvador Briggman, founder of Crowdcrux, a crowdfunding information site.

There also are fees. GoFundMe charges 5% of each donation, on top of which an independent payment processor, WePay, charges a fee of 2.9% plus 30 cents per transaction. So, for a $100 donation, total fees would be $8.20: $5 for GoFundMe, and $3.20 for WePay. Ms. Riquelme says that for the $1,730 she raised through GoFundMe, she paid $146.24 in fees. Users of Generosity pay only its payment processor: a 3% fee plus 30 cents per transaction.


Experts also say that getting the word out is critical, and many people are doing it wrong. “Begging is a huge turnoff,” says Mr. Briggman. “What I typically see people do with personal crowdfunding is just blast it on Facebook as an update, saying, ‘Please give me money, please share, please donate.’ That’s the worst way to do it.”

Before students even start the campaign, Mr. Briggman suggests they send individual emails or make phone calls to their closest friends and family, explaining what they’re doing and why. That way, when the campaign launches and they contact them again, they’re likely to get a solid base of early donations from their core supporters, he says.

He and others also suggest students post thank-you notes on social media to each of their supporters. When other people see those messages they’ll be reminded to check out the student’s campaign. Showing that other people are donating is much more effective than just asking for money, Mr. Briggman says.

Why not just ask friends and family directly? People tend to find it “less socially awkward” to send people a link to a crowdfunding profile than to ask for a check, says Prof. Lemoine.

Meanwhile, even when students don’t reach their goal, most sites allow them to keep whatever they raise and to leave the campaign running indefinitely. That means, at least in theory, they could use the same campaign to help with multiple years of tuition.

Ms. Riquelme, for one, says she’s unlikely to use crowdfunding again, citing donor fatigue. “People will be like, ‘Is she just relying on the community to pay for her school now?’ ”

This article originally appeared on wsj.com

Mr. Blackman is a writer living in Crete. He can be reached at reports@wsj.com.


Let's Talk  Call 855.898.3278

Structured settlements don't always pay out when you need them to!

Fast Annuity Settlement Transfers works hard to get you the best value for upfront cash in a lump sum, with integrity & compassion - and FAST. We pay upfront cash in exchange for the right to receive payments from insurance companies that result from the settlement of personal injury, wrongful death or medical malpractice claims. We'll work closely with you and your family and do our best to help you solve your financing problems. It is our mission to make the process as uncomplicated for you as possible, and to work only with integrity and compassion, getting you results you can feel really good about.

Get Your Free Quote and Your Questions Answered

A FAST team member will call you with more information and/or get you a FREE quote.

I understand that Fast Annuity Settlement Transfers may contact me by email or phone to discuss my inquiry and FREE quote.