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Getting a financial education can improve your life

| Tuesday, June 11, 2013, 7:16 p.m.

We are at a crossroads in the financial world.

The Federal Reserve reports that total household wealth reached an all-time high in the first quarter. Like many government statistics, this is not as good as it sounds. While the stock market recently hit a new all-time high, many middle class Americans have been on the sidelines. The top five percent of Americans own 80 percent of the equities. This is the area that has grown the fastest.

Theory has it that every dollar in stock market wealth adds two cents to spending. Every dollar that housing values increase adds 10 cents in spending in the economy. Housing values have risen much more slowly. Housing wealth is more widespread throughout the country. It is also harder to get a home equity loan today. In the past, many people used their house like an ATM machine. They then spent this money on other things.

Most Americans are not feeling like happy days are here again. One stat inflating the Fed report is that the population has increased. If we compare the per-family worth instead of the whole population, we are behind by 37 percent. Unemployment remains high. That is another misleading statistic. They do not report the U-6 number, which includes part-time workers who would like to work full-time, discouraged workers who are not sure jobs exist or people who would like a job but haven't looked for a while. The April U-6 is 13.9 percent unemployment, not the headline reported number of 7.6 percent.

Another recent report says that one in five Americans cannot afford to pay their medical bills. Some of these people have no insurance and some of them cannot not afford the deductibles and co-insurance. Another study found that workers at age 65 tend to retire sooner if they are not covered by a company medical plan. These workers are moving to Medicare. It is important to remember that there are no penalties while on Medicare if you are still employed. Social Security does have some income deductions if you have not reached full retirement age.

We have discussed in the past how many Baby Boomers have not saved enough for their retirement needs. Many people need to continue working past 65 to have sufficient income. Most jobs have become more stressful as companies are expecting more production from a reduced work force. Employees are working longer hours and pay rates have not been increasing. Many older seniors historically relied on CDs for income. Rates have been near zero for a number of years and inflation is starting to edge up, causing a loss of purchasing power.

This all shows the importance of getting your financial house in order. Review your spending and look for ways to save. Finding $10 a day can add up to thousands over a year. Increase your savings so that you will have more options and be in control. Maximize benefits such as Social Security income. Learn more about finances. A recent study by the Investor Education Foundation found that 61 percent of its sample interviewees were unable to answer three out of five questions correctly in a recent quiz. Getting a financial education can improve your life and help to reduce stress.

Gary Boatman is a certified financial planner and local businessman who serves as president of the Monessen Chamber of Commerce.

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