Permanent Value

Week in Review – October 5th 2015

Bruce Doole
October 5th, 2015

Even Affluent Parents Aren’t Footing the Full College Bill

When it comes to paying for college, the wealthy may not be as different as many may think. According to a study from BMO Private Bank released today, affluent parents – those with investable assets of $1 million or more – often do not foot the whole bill for college.

Parents pay 47% of college costs, from savings; children pay for 17%, also from savings accounts; and scholarships and relatives each pay 11%. That leaves 14%, which the study says comes from “other sources.”

“While affluent American parents plan to help their children with college expenses, they also expect their children to contribute and help pay for some of the costs,” said Darrel Hackett, president of BMO Private Bank, about the study’s findings.

The study of 493 Americans 18 years or older also found that affluent parents are more concerned about their kids securing a job and maintaining their standard of living after graduation — 51% and 46%, respectively — than about achieving high grades in college (40%).

Getting into the right college, however, is a concern for many affluent parents. Of the 28% of parents who send their kids to private school before college, 60% said they did so to better prepare their children for college. But, as a result, a little more than one-third of those parents (37%) said they would likely have to delay retirement to offset the costs of private school tuition.

“Private school can be an excellent alternative to public schooling,” Hackett said. “However, the costs of tuition and other related private education expenses can accumulate.”

According to its latest How America Pays for College study, Sallie Mae, the Student Loan Marketing Association, reported that families spent an average $24,164 on college, including tuition, room and board, and other indirect expenses for the 2014-2015 college year. That’s 16% more than the previous year and the largest increase in five years. Sixty percent of families didn’t borrow to pay for college, but among those who did, the student signed for about three-quarters of those loans, according to Sallie Mae.

Total college costs for the 2014-2015, including tuition, room and board and fees, are near $42,000 for a private four-year school, $11,000 for a public college or university for in-state residents and $32,800 for out-of-state residents, according to the College Board.

Source: Bernice Napach, Think Advisor




  • U.S. consumer spending grew 0.4% in August, the same as a revised July gain, and personal income increased 0.3%, adding to signs of economic growth in the third quarter.
  • U.S. consumer confidence rose slightly in September, reaching the highest rating since January, reflecting growing optimism about the economy.
  • U.S. home prices rose 5% in July in the S&P/case-Shiller 20-City Index.
  • U.S. weekly jobless claims rose only slightly in the week ended Sept. 26, showing further strength in the job market.
  • U.S. manufacturing expanded in September but at its slowest pace in two years, according to the Institute for Supply Management

Ivy Fund 


Week-in-Review 9/28/15

Bruce Doole
September 30th, 2015
Consumers Ignorant on Key Social Security Benefits: FPA, AARP Survey

Only 9% of consumers claim to be ‘very knowledgeable’ about SS benefits, even though 40% expect those benefits to account for a majority of their retirement income

A number of disconnects were found in a survey of consumers and CFPs whose findings were released Monday at the Financial Planning Association’s annual conference in Boston. For example, while 9% of consumers surveyed said they were “very knowledgeable” on how their Social Security benefits would be determined, only 1% of CFPs believe their clients — who ostensibly should be better informed — have that level of knowledge.

An online survey was conducted for the AARP in late June and early July, with 1,215 respondents aged 45 to 64 who do not yet receive Social Security benefits but are eligible to receive them based on their work history by age 62. Among the consumers, 16% said they had a financial advisor. FPA surveyed 1,279 of its members who are CFPs during the same time.

In a statement, AARP President Jeannine English said that “for families and individuals looking to claim their Social Security benefits soon, this survey shows that far too many face a claiming knowledge gap potentially leaving thousands of dollars on the table.”

FPA President Ed Gjertsen said in a statement that “Social Security in retirement requires more than just retiring and collecting a monthly check from the government. There are many nuances to Social Security and ways to maximize benefits that, unfortunately, many consumers are not knowledgeable about – and it’s costing them.”

Among the key findings of the survey:

Thirty-nine percent of respondents believe Social Security will make up at least half of their income, though prior AARP research found that retirees’ reliance on SS benefits increases as they age. While 34% of retirees aged 65-69 receive 50% or more of their household income from Social Security, by age 80, that percentage increases to 60%.
More than 4 in 10 planners (42%) say Social Security is likely to be a major source of income in retirement for their clients.

When it comes to their knowledge of how their benefits would change if they waited to start claiming Social Security benefits at their full retirement age, 83% of respondents overestimated or underestimated the amount of money they would receive: 67% underestimating and 16% overestimating their full retirement-age benefits.

Consumers also showed ignorance on timing their benefits claiming to maximize survivor benefits, while 74% of those who have ever been married don’t know that they need to have been married for a minimum of 10 years to collect spousal benefits if divorced; 34% believe they need to have been married only five years to collect those benefits

Thirty-nine percent of consumers didn’t even know they can start claiming early benefits at age 62.

The largest single source of consumers’ information about Social Security benefits is friends and family — 46% — followed by the Social Security Administration (45%) and newspaper articles (33%). Only 16% said they get their information from a professional financial advisor.

Among the key disconnects between consumers and CFPs:

While 28% of CFPs recommend to clients that they wait to claim benefits until age 70, only 13% of consumers plan to wait that long (and it’s likely that more CFPs would recommend waiting if that were the only retirement planning issue involved).

More than 90% of CFPs recommend clients review their Social Security benefits at least once every several years, while only 64% of consumers said they had done so within the past two years,

Among CFPs, 50% accurately estimated the number of years that the Social Security Old Age trust fund will remain solvent under current projections — 10-20 years — compared with 27% of consumers, many of whom expected the trust fund to expire earlier.

Summing up, AARP Chief Public Policy Officer Debra Whitman said in a statement that “we found that far too many consumers don’t understand the rules of the road, and this is a case where lack of knowledge can have a major impact for the rest of their lives.”

Source: James J. Green, Think Advisor


  • U.S. Existing Home Sales fell 4.8% in August.
    Eurozone Purchasing Manager’s Index fell to 53.9, from 54.3 a month ago.
  • China Purchasing Manager’s Index fell to 47.0, a six-year low.
    U.S. New Home Sales rose 5.7% in August, their highest rate since 2008.
  • U.S. Durable Goods Orders fell a seasonally adjusted 2% in August, the first decline since May.
  • U.S. Weekly Jobless Claims rose 3,000 to 267,000.
  • U.S. Second Quarter Gross Domestic Product was revised up to 3.9% from the previously-reported 3.7%.

Ivy Fund 


Week in Review – 9/21/15

Bruce Doole
September 21st, 2015

How to Help Your 401(k) Balance Grow Faster
The 401(k) has become the cornerstone of most individuals’ retirement savings. Here are some suggestions of how someone can make their 401(k) balance grow faster:

  • Increase your contributions every year. Many 401(k) participants cannot start with the maximum level of savings. For 2015, the maximum contribution level is $18,000 for those under age 50 and $24,000 for those who turn 50 this year and above.
  • Use the catch-up provision. Once you turn 50, you are eligible to start making catch-up contributions–an extra $6,000 a year for 2015. Every few years, this catch-up tends to increase. The federal government recognizes that a) these are your peak earning years and b) you may be behind on retirement savings.
  • Understand your match. Many 401(k) participants don’t take the time to understand how the company matching program works. If your company is under a “safe harbor” program, the match will be $1 for $1 on the first 3% you save, and then 50 cents for $1 on the next 2% you save. That means if you put away 5%, your company will match 4% of what you save.
  • Know your vesting schedule. Some 401(k) plans will have a profit-sharing component. This means if your employer has a very profitable year, they may make an allocation of money to your retirement account. Here’s the hook: If you don’t stay for a certain number of years with the company, you will forfeit this free money put into your plan. Far too often, people walk away from a job one year or six months before they become fully vested in those plans.
  • Choose low-cost investments. Most participants don’t take the time to analyze the funds within their 401(k) plan. Although you don’t always see a fee taken out of your account, there is no free lunch to investing. Make sure you take the time to review all of the funds and look for the ones that have lower fees with better overall returns.
  • Don’t borrow. When you borrow from a 401(k), the money you take out has now stopped working for your retirement. In addition, you are paying interest on your own money.

Source: Ted Jenkin, The Wall Street Journal



  • U.S. Business Inventories rose 0.1% in July.
  • U.S. Industrial Output slipped 0.4% in August, matching expectations.
  • U.S. Retail Sales rose a seasonally adjusted 0.2% in August, meeting the consensus forecast.
  • U.K. Consumer Price Index fell to 0% in August, down from 0.1% in July.
  • German Economic Sentiment fell to 12.1 in September, its lowest level in 10 months.
  • U.S. Consumer Price Index fell 0.1% in August, but up 0.1% minus food and energy prices.
  • U.S. Weekly Jobless Claims fell by 11,000 to 264,000, the lowest level since mid-July.
  • U.S. Housing Starts fell 3.0% in August after a 4.1% drop in July. 

Ivy Fund