Money Monday

MONEY MONDAY 6/25/18

KIBBLE

The Labor Department's "fiduciary rule" is dying a slow, painful death - the latest blow came late last week when a U.S. Appeals Court issued an order to vacate the rule. And while we don't like government over-reach and excessive regulation, we liked THIS rule: it would have forced financial advisors to put your best interests first when dealing with your retirement money

TOPIC A: Jobs

Some bad news from local Fifth Third Bank: the company confirmed it laid off "an undisclosed number of employees throughout the Cincinnati region." The bank has more 7,500 employees locally.

Why is Fifth Third doing this? All we are getting is corporate speak. The bank also noted that they are not cutting back on the 1,100 open positions they currently have.

Fifth Third Spokesman Larry Magnesen said, "There have been some reductions. From time to time, we make adjustments when there is not a good match-up between staffing, market demand and the operating environment,"

It's salaries-for-dividends. The day before the layoff news came, Fifth Third announced they are boosting their dividend payment to stockholders by 13%. This is the 5th time in the last 6 years the bank raised its dividend. 

So what can you learn from this? Healthy companies cut employees and it could happen to you. It's not just the old guard like Fifth Third. About a week ago Tesla laid off 3,500 employees. Earlier this year, Amazon cut hundreds of corporate employees in Seattle.

So what do you do if you get a pink slip? Get some momentum by trying to find another job ASAP, or find another before you leave. Having a job (ANY job), or even a creative way to show you are employed, gives you a +149% boost to get hired. 

Also, if you're looking for a new job, try to focus on smaller companies. Applications to companies with fewer than 500 employees have a 192% higher interview rate. Why? 1) Bigger companies have stricter HR policies and 2) smaller companies have a smaller pool of applicants.

And if your job cut is more of an "early retirement opportunity:" Clearly understand your benefits, and make a road map for your retirement accounts. Also make sure you get paid for all of your paid time off.

HERE'S THE SIMPLY MONEY POINT

The economy is going well, but you never know when a job cut could happen to you. Manage this by keeping your momentum if you want a new job, and making a plan if its an 'early retirement opportunity.'

#2: Enquirer

Every Sunday, Simply Money is answering your money questions in the Cincinnati Enquirer.

Greg: I work at P&G and we just found out they’re adding a Roth 401(k) option to our plan. Is this something I should be using?

#3: Retirement

In an ideal world, you would have started saving for retirement in your early 20s, which would have given your money decades to grow. However, we at Simply Money, we like to say, "There's the perfection of theory… then the mess of reality." So, if you've gotten a late start on saving, here are some tips as you approach retirement:

Get "aggressive" with how much you're saving now: By "aggressive," were not referring to taking more risk. What we mean is start saving AS MUCH AS YOU POSSIBLY CAN. This means looking at your spending and seeing if you can shift ANYTHING MORE to your savings.

SMA rule is 20% of take-home pay (maybe more if you're super behind)

Don't take on additional debt: We live in a consumption-driven society with roughly 2/3 of the total gross domestic product stemming from consumer spending. Don't rack up credit card debt... and don't do anything stupid with your house (like buying a new one, or refinancing to a longer term). If anything, you want to pay PAYING OFF all your debt BEFORE retirement so you can ease some of the burden off your retirement budget.

Consider new ways to bring in more income: Yes, this could mean getting a second job. Or a part-time job. Or driving for Uber. If you need to save more, and your current income stream isn't cutting it, you need to find ways to increase how much money is coming in every month.

Don't take more investment risk to try and make-up for lack of savings: Now isn't the time to experiment with trading or investment vehicles that you don't understand or that promise high returns.

Try to work longer: This isn't always feasible because 60% of Americans end up retiring EARLIER than they were planning. But if you can keep working past the original age you were hoping to retire, that's less time you'll have to rely on your retirement savings. You could also consider working part time or ask your employer to reduce your overall hours to extend the number of years you are still earning income.

HERE'S THE SIMPLY MONEY POINT

If you're behind in saving for retirement, there are ways you can catch-up… but don't keep waiting! This is something you need to address NOW.