Could a Robo-Advisor Help You Save While Going Back to School?

Going back to school has become quite popular over recent years. Since the recession, Americans have been struggling to get back on top. In fact, over 4 million adults ages 35 and up are currently enrolled in college.

Paying for college as an adult can be quite a challenge, however; chances are good that by now you have no parental support, so you are going to be financing the entire cost of your education singlehandedly while struggling to keep up with your existing bills.

If so, you may have another looming concern in the back of your mind, and that is retirement. Yes, going back to school should hopefully enable you to earn more money, which should eventually help you to save toward retirement, but what about right now?

While you are back in university or technical school, you will be juggling all of the following costs:

  • Tuition
  • Fees
  • Textbook costs
  • Supply costs
  • Transportation costs
  • Housing
  • Utilities bills and other regular costs of living

With all of this on your plate, you are going to have a hard time paying your bills, let alone saving money.  So what can you do?

Well, it is smart to try and continue saving for retirement while you are attending college. And it is possible if you are taking out student loans to pay the cost of your education. This should leave you with roughly the same amount of money free each month as usual.

If you manage to continue working at your current job for the same salary, you may still have some money to put away.

What you can do is look into using a robo-advisor. This is a software program which takes over the job of a human financial advisor, saving you money on management fees for your retirement accounts.

A robo-advisor comparison chart can help you to select the best robo-advisor to meet your needs. But one which we recommend for adults who have returned to school is Wealthfront.

Why is Wealthfront ideal for adult college students?

  • The minimum deposit is only $500. Even if you have not managed to save a whole lot over your lifetime thus far, there is a good chance you can spare this much.
  • So long as your account value ranges between $500 and $10,000, there is no annual fee. Once your account is $10,000+, the annual fee is just 0.25%.
  • All of the investment advice you receive is fully personalized based on your financial information.
  • Your portfolio is automatically rebalanced over time.

In short, using a robo-advisor like Wealthfront eliminates the expensive fees and hassles of dealing with a traditional human advisor. Accounts automated by robo-advisors like this one typically perform as well or better than fully managed portfolios, but since you can invest with them at a fraction of the cost, far more of your hard-earned money goes toward your retirement.

While you are back in college working toward your degree or certificate, you have more than enough on your plate without having to worry about taking a demanding, hands-on approach to saving for retirement. You also simply do not have the money to pay for high fees with a traditional advisor.

So read a review of Wealthfront. Once you open an account and get started with Wealthfront or another top robo-advisor, you can start saving toward retirement even while you work toward earning your degree.  The hands-off approach will allow you to focus on your studies so that you can get the most out of your education!

Swamped in Student Loan Debt After Returning to School? A Robo-Advisor Can Help You Save for Retirement

In a recent blog post, we talked about how you can save for retirement while you are going back to school with a robo-advisor. But what if you have already returned to college and graduated, and you now have more student loan debt than ever?

There are programs for student debt forgiveness out there, but most are geared toward people who work in highly specific job sectors such as public service. If that doesn’t describe you, you may feel like you are at a loss.

You are not the only one, however; more and more Americans are returning to college. In fact, 17% of all college and graduate students in 2009 were over the age of 35. By 2020 that number is projected to grow to 19%.

So there are more and more solutions geared toward returning college students when it comes to saving for retirement. And those same robo-advisors which can help you while you are in school can also help you to save after you graduate.

What is a Robo-Advisor?

To review, a robo-advisor is a software suite which provides you with personalized financial advice based on your specific situation. You input your information and the robo-advisor comes up with an investment plan to help you save toward retirement. If you approve the plan, you can invest directly through the robo-advisor.

It is a fairly hands-off process; the robo-advisor takes care of most of the legwork, even rebalancing your portfolio as needed.

Here are some of the benefits:

  • You can get started with just a few hundred dollars.  So even if you are neck-deep in student loan debt and not yet making a lot of money after you graduate, you may have enough to open an account.
  • You will not spend all your hard-earned money on fees you cannot afford.  But the performance you get from your account will be on par with (or better than) what you would get with a fully managed portfolio overseen by a human investment advisor.
  • Investing with a robo-advisor does not demand a whole lot of you in terms of time and involvement.  This allows you to spend your time and focus on your new career instead of on managing your retirement accounts.
  • Robo-advisors are convenient.  If you were working with a traditional advisor, you would have to pick up the telephone or climb in your vehicle to have a discussion about your portfolio.  But with a robo-advisor, all you have to do is log in and check on your investments with your laptop, desktop or mobile device.  You will also receive alerts if anything needs your attention.

Top Robo-Advisors to Consider

If you start researching robo-advisors, you will discover that there are a lot of them out there now to meet the growing demand. So how do you choose one? Well, the two we recommend most highly after our research are Wealthfront and Betterment. Compare Betterment vs. Wealthfront to get a feel for the differences between the two.

In our previous post, we talked a lot about Wealthfront, so let’s explore Betterment a bit more.  Here are some key features of Betterment:

  • There is no minimum deposit.
  • The account fee for a portfolio up to $10,000 is just 0.35%. That fee drops as your account value rises.
  • Features include single stock diversification, tax loss harvesting, direct indexing, and fractional shares.
  • If you need to speak to a human advisor, you can call and reach someone with your questions.

Interested in learning more about Betterment? Read a Betterment review. Saving for retirement after you have gone back to school and graduated can be a challenge. You have accumulated debt and you are getting a late start in your new career. But even if you only have a little money to invest, you can get started right now with a robo-advisor!

How Refinancing Could Help You Afford Your Education

Financing education is complicated and challenging at any age. But if you are an adult student returning to college, you have more financial questions and complexities to juggle than a younger student.

Not only do you need to be concerned about the student loan debt you are about to accumulate, but you may already be swamped under other debts. These may include previous student loans as well as a range of other loans and lines of credit.

Student debt is a major and growing epidemic. In 2014, 69% of graduating seniors left college with an average of almost $29,000 in student loan debt.  Meanwhile, the cost of college continues to climb.

So what can you do about it? One useful tool is personal loans. The thought of financing your education with personal loans may sound unusual, but personal loans allow you to refinance—and that may actually change the numbers you are struggling with to something you can afford.

Here is what you can do with refinancing through personal loans:

  • If you have existing student loan debt with a high interest rate, you can use a personal loan to refinance to a lower rate. This could end up saving you thousands of dollars over the coming years. That is all money you can feed back into your education now that you are returning to school.
  • If you have other debts (past personal loans, business loans, or lines of credit) with high interest rates, you can do the same thing with these. Refinance them at lower interest rates and you put money back in your pocket.
  • You can plan to do the same thing with your upcoming student loans. After you graduate with debt, you can refinance it at a lower rate, sparing yourself from thousands of dollars in unnecessary interest.

So many people besieged by debt do not realize that refinancing is even an option. There is no reason to pour more money down a black hole than is necessary. It takes time and research to find a personal loan with a low interest rate which is appropriate for refinancing, but it will pay off in a huge way.

Think about how much you could save, and how many weeks of work it would take at your day job to make the equivalent amount. A few hours or days of research is worth it.

Ready to get started? Click to compare personal loan interest rates. Refinancing your past debts now can help you to afford your education—and after you graduate, refinancing again can help you pay your loans back fast so you can get on track for personal financial growth!

What Type of Retirement Plan Do You Need?

Here at Adult-ed.net, most of our readers are in one of several situations:

  • You are thinking about going back to school
  • You are already back in school
  • You have recently graduated from school, possibly for the second or third time, and you are now embarking on a new career path

No matter which of these situations you are in, there is a good chance that you do not yet have a retirement plan. You have been focusing most of your time and energy on your education, and most of your money has gone toward financing your schooling as well. So retirement might not be the first thing on your mind.

But it should be. It may be hard to imagine getting old now, but one day you will get there, and when you do, you will be struggling a lot harder than you are now if you do not have a nest egg waiting for you.

Pensions Are Going Away

Do you ever get the impression that retirement was a lot easier and more straightforward for your parents? It isn’t an illusion; retirement was a lot easier and a lot less risky for a lot of boomers. This is because employee-sponsored pension plans used to be common. But they are quickly fading into the mists of time.

This leaves you with the responsibility of 1-coming up with your own retirement plan, and 2-assuming the risk for your investments. These are both very daunting realities which most American workers are simply unprepared for.

Choosing the Right Retirement Plan

A good starting point is the guide, “What You Should Know About Your Retirement” by the Department of Labor.  In this guide, you can learn about different types of retirement plans, how to file claims, and more.

One popular option is a 401(k). In fact, this should in most cases be your first choice if you are not offered a traditional pension plan. It is a retirement plan which is sponsored by your employer. There is a match for your contributions, but you are the one who assumes the risk should your investments go south. You also need to figure out what to invest in yourself.

Managing Your 401(k)

How much should you contribute to your 401(k)?  Well, the short answer is “As much as possible.” It is very hard to save up for retirement these days. Most occupations simply do not pay what they used to, and the average lifespan is increasing. So we have to save up more than ever, but we have less money to do it with.

Another question you might have about retirement is this: What happens if you change jobs and companies? What do you do with your old 401(k)? It is uncommon to hold a single job for a lifetime nowadays. Most people jump from job to job. So should you roll over 401(k) to IRA?

That depends on your situation, needs, and goals. Many employees do opt to move their old 401(k) plans over to a new employer. This keeps things simple and consolidated.

If you are juggling a lot of financial complexity in your life, this option may help you to keep things streamlined. There are also circumstances where you can leave the existing 401(k) with your former employer.

If you roll over your funds from your 401(k) plan to an IRA, however, you can benefit from substantially lower fees. There are also situations where you might have no choice; if for example you are leaving your job and embarking on a new career where you will be self-employed, you cannot have a new 401(k).

Whatever course you decide to take, it pays off to do your homework. A lot of boomers are facing old age without the retirement savings they need, and most Millennials have very little (if anything) saved for retirement.

Basically, it is easy to get it wrong, and well worth your time to make sure you educate yourself sufficiently to get it right. Be sure to keep up with our blog posts; we are here to help!

How Far Behind Are You On Saving For Retirement?

As an adult student, you face retirement challenges above and beyond what is typical. Whether this is the first time you have gone to college or you are heading back after a break in your education, you probably will have higher student loan debt than many of your peers. You also may be getting a later start on your career.

Even so, it is likely you are not that far behind your peers when it comes to stockpiling a nest egg. This is good news and bad news.

The good news is that you do not need to feel like a failure compared to your peers—and you can acknowledge that your situation is in large part a result of the place and time you were born into, not laziness or a lack of intelligence, talent or ambition. The downside is of course that everyone is in the same sinking ship.

The Impending Retirement Crisis is Real

Just how serious is the retirement situation?

Well, for starters, consider that the median retirement account balance for working-age households is just $3,000. For households nearing retirement age, the average balance is a meager $12,000. This includes households with and without retirement accounts (which tells you that a lot of households have no retirement savings whatsoever).

Here is another sobering estimate from the New School’s Schwartz Center for Economic Policy Analysis. You might think that the middle class is exempt from the retirement crisis, but most middle class households still do not have sufficient retirement savings to maintain their status in old age.

Around 30% of the current middle class are likely to be poor or close to poor when they hit old age, confined to living on $20,000 a year or less.

How Does Your Net Worth Compare to Your Peers?

Now that you have a stronger understanding of the retirement crisis, you may be wondering what your exact standing is relative to your peers.

There is no way to know for certain, since we can only rely on incomplete data from various studies, none of which are fully comprehensive. But going by the most reliable data, the average American net worth is not nearly as high as you might think.

At the link above, there is a chart you can view to compare your standing with your peers. Look across the bottom of the chart and you will see age brackets. Find yours, and then look along the left-hand side to find your income level. You will find yourself in either a green, red, or blue bar. This determines your “percentile.” This tells you how you compare to your peers.

So let’s say that you are 38 years old. This places you in the 35-44 age bracket. If you have $35,000, you are in the red bar, which places you in the 50th percentile. This means you are doing better than 50% of households in your age group.

That is not a lot of money in the grand scheme of things, which tells you just how poorly everyone is doing.

One important thing to know about this data is that it incorporates everything in calculating net worth. That means not just the balance in your savings account, but also the value of any property you own and anything in your retirement accounts.

What Can You Do?

You are in a situation where you will have to get as aggressive as you can in saving money for retirement, or you will not stand a chance of getting there. Hopefully social security will be expanded and maybe you will get lucky and receive some inheritance, but there are no guarantees, so you should build as much of a nest egg for yourself as possible. Here are a few quick tips:

  • Keep your expenses as low as possible. This may mean scaling back with your housing, dispensing with your cable plan, learning to cook at home, or refinancing your student loans. Do anything you can to save money.
  • Start saving for retirement now. If you cannot afford to deal with a traditional advisor, try a robo-advisor instead. The fees are low and the entry barriers are minimal. Even with just a few hundred dollars to invest, you can get started.
  • Look for opportunities to advance your career. Cultivate more ambition if you need to. It is important to keep your life in balance, but you also need to strive for a higher income. If a chance to excel presents itself, you need to be ready to take it.

It is not your fault that you live in a time when saving for retirement is extremely difficult. But there are steps you can take to try and get your life on track. Live well below your means if you have the opportunity to do so, and do not worry about what your peers are doing. You will probably surpass most of them in time if you haven’t already.

Should You Go Back To School? 4 Factors You Should Consider

These days, going back to school is all the rage. The economy is in a sad state of affairs, and workers need every credential and qualification they can get to stay competitive among employers. The latest data from the Economic Policy Institute suggest that college graduates in particular are seeing record returns on their investment. The pay gap between the college-educated and everyone else is higher than it’s ever been.

Should you go back to school? The answer will be different for each person. Here are some key questions to ask before you take the plunge and head back to school to further your training, employability and salary potential.

1. Have You Resolved Past Problems?

If you were once in school, why didn’t you finish? Try to be honest with yourself. Maybe you were a lazy high school student but now that you’re a responsible adult, lack of initiative is no longer a problem. Then going back to school for a GED could be a great idea. Maybe you were once a college student that hated the way classroom learning was structured. If you hated it then, why would you like it now? Unless something has changed, it may not be a good idea to hastily fling yourself into an academic environment to see if you sink or swim. In other words, it’s a good idea to resolve the issues that led you to leave school in the first place.

2. Have You Refined Your Goals?

If you’re interested in switching to a more fulfilling or lucrative career, getting a degree in the desired area of interest is usually a good place to get started. However, it is vital to do your homework first. Not all professions are in demand. Unless you want to go back for the sheer joy of learning, consider whether your educational goals make sense in terms of the economy. Find out which careers are currently in demand; explore our career guides. You can also try the U.S. Department of Labor’s career search tool.

3. What Will You Do Afterwards?

When you’re young, it’s easy to miss the bigger picture of getting your money’s worth for your education. That’s a major advantage of being an adult learner with lots of real-world experience: you can more realistically assess what you can do and what the likely outcome will be. So ask yourself: what do you want to do when you finish school? The answer should guide every decision you make in the process of returning. Always begin with the end in mind.

4. How Will You Pay For School?

These days, postsecondary school tuition is at record highs. It often takes thousands of dollars to get a degree, depending on what you have in mind. While a GED won’t cost you too much, an MBA is much pricier. It’s up to you to strike a balance between ambition and affordability. The next step is to make a plan for paying and, if necessary, master the financial aid and scholarship application process.