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Financial remedies for new challenges

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Brenda EcheverriaIn our article, "Bridging the generation savings gap," we covered some of the different financial realities that the younger generation is facing and the importance of continuing to find ways to save. In today's blog, we share some resources and remedies available to help manage these new economic challenges.

Student loan debt issues

College tuition in the U.S. has been increasing faster than the rate of inflation for decades and faster than wages. Starting your earning years deep in debt presents all kinds of challenges.

Interest on unsubsidized student loans starts accruing right away when you receive your loan. Interest rates on most student loans are currently higher than the average mortgage rate.

  • Check into student loan forgiveness programs to see if you qualify. See our articles in the your$ summer 2014 and 2015 issues.
  • If you meet certain requirements, you might be eligible for student loan refinancing and consolidation, which can make it easier to manage repayment. Note: You should never be charged a fee to consolidate! Go to studentaid.ed.gov for more information.
  • Set up automatic monthly payments for your loans and you could reduce your interest rate by up to .25%.
  • Make payments while in school. This sounds counter-intuitive, but any amount you can throw at your loan will reduce what you owe.

Trending: Self-funded retirement

Employees have increased responsibility for funding their retirement. Employer funded pensions are a thing of the past.

  • Time is still on your side. Every day that slips by is a missed opportunity to maximize the impact of compound interest. Start now.
  • Roth IRA and 403(b) savings. This after-tax retirement savings option offers more flexibility and the opportunity to lower tax liability in retirement because all qualified withdrawals, including earnings, are tax free.
  • More and more districts are offering a match to employees for 403(b) contributions. It’s a relatively new benefit in the public employee world and can help you build up your savings faster. It’s free money. Don’t pass it up.
  • Minimizing the fees associated with retirement savings accounts is something you have control over and it will keep more of your money working for you.

WRS contribution reduces take home pay

Today’s Wisconsin public school employees split the required WRS contribution 50/50 with the district. Before Act 10, 100% of the contribution was paid by the district.

  • WRS is a wonderful benefit. It’s the ninth largest public pension fund in the U.S. It is fully funded and one of the best pensions in the country. You can learn more about your state pension through our popular video series. Go to weabenefits.com/seminars and click the “on demand” tab.

Changes in health insurance benefits

Act 10 mandates that Wisconsin public school employees pay a minimum of 12% of their health insurance premium and many districts have gone to high deductible plans.

  • Under 26 years old? Thanks to the Affordable Care Act, you have the option to join or remain on your parent’s plan even if you are married, not living with your parents, and eligible to enroll in your employer’s plan.

Get a free one-hour financial consultation: 1-800-279-4030

Brenda Echeverria, Financial Planner

All investment advisory services are offered through WEA Financial Advisors, Inc.