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Today’s crop of retirees, the mature citizens who are now actually living through retirement, and in some cases paying the price of poor decision-making earlier in life, have a lot of wisdom to pass on to the rest of us!

According to a survey by the Transamerica Center for Retirement Studies, some aspects of the reality of retirement don’t quite match expectations.

If they could go back in time to their youth, knowing what they know now about their retirement years, what would these retirees tell themselves? What would they tell you, even now, as you prepare for your own retirement?

Thanks to Transamerica’s researchers, we now have a pretty good idea.

1. Retirement May Come Early!

First, don’t count on being able to retire on your planned timeline. The majority of the current retirees surveyed reported that they retired sooner than expected and only 16% said they had saved enough by that time.

For example, most retirees reported that they didn’t get to choose the date they left the workforce. Six in 10 reported that retirement came sooner than they had planned. Only 16% of them said they had been ready to retire.

The rest were forced into retirement by poor health, the need to care for an ailing family member, layoffs or other structural changes, or just sheer unhappiness with their employment and career situations.

You need to have a Backup Plan in case any of the above happens to you!  

Another Transamerica study found that 37% of workers have a backup plan for retirement income if they are unable to work before their planned retirement. If you don’t have a plan, we can help you structure one.

2. Save More!

Almost half of retirees (47%) reported that they hadn’t saved enough while they were working. Most respondents (69%) cited Social Security as their primary source of income.

Just 18% cited retirement accounts and personal savings, including a 401(k) or similar accounts/IRAs (7%), and other savings and investments (11%) as their primary income source. One in 10 retirees reported a company-funded pension plan as their primary source.

Furthermore, only 16% of retirees reported that they had built enough savings to have a secure and successful retirement, and 76% wished they had saved more on a consistent basis.

3. Get Professional Advice!

About half of the survey respondents, 53%, would have liked to have received more information and advice from their employers, while 68% wished they had known more about investing and retirement saving.

Only 31% of retirees said they should have relied more on outside experts to monitor and manage their retirement savings.

Getting professional advice is especially important because beginning at about age 55 and lasting through your 70s, you will likely have to make a series of important decisions, including:

• Whether and how to tap your retirement accounts,
• When and how you will take Social Security benefits,
• Whether to enroll in Medicare Parts B, C (Medicare Advantage), D or in a Medigap insurance plan.

Some of these decisions have far-reaching and even permanent consequences. Having professional advice in your corner is critical to making sound and timely decisions.

4. Plan on Being Retired for Decades!

On average, retirees reported themselves to be in good health, expecting to live a median average of 28 years into retirement.

Four in 10 expected to live for another 30 years or longer. Many of them were planning to live to 90. Plan accordingly.

Many persons who live long, run into an issue of dwindling cash in their retirement accounts, forcing them to make difficult decisions later in life, when they will likely need their funds more than ever before.  The biggest fear of retirees is the fear of running out of money!!!  This is where annuities and life insurance cash values can be critically important as they can be converted into a “Guaranteed Income for Life!”

5. Get out of debt!

One in four retirees reported prioritizing trying to get out of credit card debt, and another 21% were prioritizing paying off their mortgages. The combination is going to crimp anyone’s lifestyle on a limited retirement income.

If you have racked up debts over your lifetime, you should consider crafting a plan for how you pay it off before you reach retirement! The last thing you want is to struggle financially because of these high-interest debts that eat into your income.

6. Start planning now!

Nearly half of respondents reported wishing they had started thinking about retirement earlier. Nobody said they were glad they hadn’t considered retirement until the last minute.

It is important to either start or continue putting money aside for the future. A strategy to consider is to increase, by 1% each year, how much money you put away for yourself. 

For an early Father’s Day event and my father’s birthday, I took my father and brother to the Yankees at Mets game at Citifield, part of a bigger event thrown by Gotham Networking.  We were trying to remember, and it could be 20 years since the 3 of us have attended a live baseball game. 

We noticed recent changes immediately, starting from the entrance to the parking lot.  There were 4 cars in front of us and it still wasn’t clear how much the parking cost, nor what methods were available to pay for it.  There was a very small $40 parking sign about 1 foot off the ground in front of only one of the three lanes and we couldn’t see it until we were 2 cars away from the gate. 

Since this was my treat, I was fumbling for cash when my father spotted the car in front of us using a credit card, which is what we decided to do.  Once we got into the stadium, we decided to grab a quick coffee before deciding where to eat as it started to rain just before game time, so the walkways and concession stands were already jam-packed with long waiting lines. 

Paying via tablet is now the convenient norm for many pizzerias, coffee shops, quick service, and fast-food locations around the city.  These gadgets are quick to ask you to add, in some cases a hefty tip (15%-30% or higher) to your order, even though it’s a grab-and-go situation. 

You have probably noticed, there is sometimes subtle and sometimes not subtle pressure to tip at certain places where you had never tipped before.  Payroll processing systems have become advanced with companies like “Square” who offer tablets designed to expedite payment time and increase tip amounts.

T.I.P. used to stand for: To Insure Promptness!”    It seems like the old school “tip jar” is on its way to becoming extinct.  I must say I like the old school tip jar better as you make eye contact with the worker and get a “thank you” or sometimes a little nod from them showing that they appreciate your putting a few dollars in that jar means a lot.

My question is, where does this “guilt tipping” end?  There are different schools of thought about that and which is better, the old-school jar or the tablet. 

Pro Tipping Jar:

1. Eye Contact: When you frequent a store, you get to know and communicate with the employees.  It’s a nice feeling to make eye contact and get a thank you or nod as you place the cash in the jar.
2. Direct Benefit:  You know you are directly helping the workers that you see. 
3. Commensurate to Service Level: If you get stellar service or something special is done for you, perhaps you get a bigger nod or thank you when depositing larger bills into the jar, which helps you get good treatment going forward.

Pro Tablet Payments:

1. Efficiency: The tablet is faster than looking for bills and they do the math for you.
2. Points: Tipping by credit card gets you an additional frequent flyer or award points.
3. Budgeting: You have a record of ALL expenditures, including tips, which help you keep a more accurate spending budget. 

If you ask 10 New Yorkers about tipping, you might get 10 different answers.  Some of the tablet drawbacks are:

1. Who benefits: It is not always clear who is directly receiving these tips; is it the cashier, or server or are they pooling with employees in the back?
2. Appreciation: Tipping is now expected everywhere so employees are less likely to thank you and or nod in appreciation. 
3. The Evil Eye: There are now situations when cashiers will look directly to see if you are tipping and how much.  This is when “guilt tipping” starts to creep in. 
4. TipFlation: With inflation, we are already paying more for goods and services.  What I call “TIPflation,” is now guilting patrons into tipping more and more often. 

I was thinking about this a few months ago when I was at the airport, en route to see a client in Florida.  There was not enough time before boarding to sit down at a restaurant to eat so I stopped at a CIBO “Express Gourmet Market,” which was a self-checkout sandwich machine with no employees.  When I was about to pay, a tip screen popped up.  I had to laugh as I asked myself, who is receiving this tip, the machine?   I knew that there would be a column I needed to write on this topic and today is the day!

Like pizza, there is no right or wrong with tipping as it is your personal choice.  If one person says this thick-crust pizza is better than that thin-crust pizza, is it the gospel?  Of course not, as you might like the thin crust better.  Tipping is the same as it is based on your beliefs and personal experience. 

Since we are now in the summer and summer camps start this week for some campers, I suggest reaching out to the camp to see if they have a “camp tipping guide!”  Also, as per Jackie Gifford, Editor in Chief of Travel & Leisure Magazine, when staying in a hotel the tipping guide is $3-$5 per day and more if you have a big suite party, which usually means a big mess!

Have a Great Summer!

Summer Camp!  Just those two words bring back fond memories for me as a teenager.  I always liked this time of year as school is winding down, the weather is improving, and baseball season is well underway.

In March I covered how to research and select a summer camp for your child(ren).  Since we are now post Covid-19, I reached out and interviewed my longtime friend Ken Barer (KB), Co-owner of Mohawk Day Camp in White Plains, to get the scoop on what’s going on with camp this year.

KB said, “We are 100% full and we filled up the earliest in our history.  I think there was plenty of isolation and pent-up anxieties during Covid-19, and kids are really looking forward to reconnecting and relearning how to socialize, and camp is the best place to do it!” 

Ken makes a good point as camp can be a transformative experience for children.  In many cases, it could be the first time campers are away from their parents for an extended period of time.  For the children, it is a good time to learn about autonomy; meaning, it allows the campers to learn how to take care of and fend for themselves.  It can also be a lesson for parents to see how their children can operate mostly on their own, learn the power of teamwork, and how to get along with other campers from different backgrounds and sometimes foreign countries.  I still have a close friend named Mickey (Miklos) from Budapest, Hungary that I met in camp.

As an insurance and financial advisor, I look at things in terms of risk vs reward.  Sleepaway camps have gotten expensive!  Campers are rarely aware of how much money their parents are spending on summer camp.  These days, $1,000 per week per camper is not out of the question.  There are always surprises, especially for the first-time campers.  The more preparation is done ahead of time, the less risks campers face.

Tips regarding sharing pre-existing health information with your child’s summer camp include but are not limited to are:

1. Prepare a List of Medical Issues: Most camps ask for this information in advance; however, one can never be too careful. 
2. Allergies: It is critical for the camper and the camp to be aware of any allergies, food or otherwise that your child has.  Allergies like peanuts can have an adverse effect on health.
3. Insurance Cards:  It is important for both the camp and camper to have their health insurance and prescription cards handy in the event of an accidental injury. 
4. Emergency Contacts:  There are camps that do not allow cell phone usage during the day, so it could be beneficial to have a hardcopy file your camper brings with them and keeps in their bunk just in case. 
5. Inquire About the Infirmary: It never hurts to ask questions and/or visit the infirmary to see what it looks like.  Ask if they have epi-pens and other supplies to deal with emergency situations. 

The first week or two of camp is the most difficult for campers to negotiate.  Like the first day of school, there can be separation anxiety and other anxieties as campers adjust to their new surroundings and bunkmates.  There is a big difference between homesickness and physical sickness, so preparation is critical.

Since most campers go away for 4-8 weeks, sending them a care package early in the summer can be advantageous and a good way to show you care. 

See my 5 tips for the summer camp care package.  Since rules have been changing during Covid-19, check your camp’s guidelines before sending out that “I Love You” package!  Here goes:

1. Brain/mind games: Studies show that kids can regress mentally up to 25% during the summer.  Games like masterminds, puzzles, books, and playing cards can keep them sharp.
2. Glow-in-the-dark products: Party pack glow-in-the-dark bracelets, sticks, and Frisbees are fun and can be shared with bunkmates.
3. Battery operated: Fans, radios if permitted, and electronics are always appreciated.
4. Snacks: Some camps no longer allow food in packages or have campers open the box while supervised.  Try rice crispy treats which are nut and gluten-free so easily shared.
5. Make it personal: This is a great time to communicate feelings even perhaps some that you don’t often verbalize.  A time to share words of wisdom by including a card and/or hand-written note.  A little note can go a long way and have an everlasting effect on their summers and through lives journeys!

I would like to take this opportunity to wish you and your campers a fantastic summer season!  I wish I was joining them as those were the days!!!

There is a saying amongst planners that the average person spends more time planning a 2-week family vacation than they do planning their own retirement!  While the average person should spend more time planning their retirement, the planning time for your 2-week family vacation is justified for several reasons.

As per the NY-1 interview of Robert Sinclair Jr., Senior Manager of public affairs at AAA (Automobile Association of America) 2022 had some of the worst flight delays and cancellations in history!  The lack of travel followed by huge demand increases left airlines short-staffed and scrambling to hire and rehire personnel. 

Also, due to retirements and attrition, there is a national shortage of air traffic controllers.  “In 2022, 70% of ALL weather-related delays in the USA stemmed from New York’s 6 airports because of the connecting hub and spoke system,” said Mr. Sinclair.

Here are my updated TOP 10 Summer Travel Tips:

1. Book Flights Early: Aire fares are up 40% from last summer and there are projections for more increases; hence, now is a good time to book flights and lock down your trip.  Also, there is a 250% increase in international bookings so try and book those now as well.  Many countries such as Japan and China have lifted Covid restrictions.
2. Call Your Credit Card Company in Advance: Give them your full itinerary, with dates in each city.  I have had credit cards frozen after they have seen a string of out-of-town expenditures.
3. When Packing Start from Feet to Head: This is a good thing to do in the morning getting ready for work.  I start from feet to head and pack in piles.
4. Pack a Change of Clothes in your Carry-on Bag if Flying: Over 29 million bags are lost or delayed each year.  Be ready when and if it happens to you.
5. Buy an Off-Color Suitcase: This decreases confusion and is more easily recognizable during ground-transportation madness with people jockeying for their luggage.
6. Sign Up for the TSA: The TSA pre-check can make the difference between making and missing a flight.  It offers better distancing and eliminates the need to remove your shoes, belts, and/or laptops expediting the process.  TSA memberships cost only $85 and it is good for 5 years.  The renewal is discounted to $70 if done online at tsa.gov/precheck.com or $85 in person.
7. Research AAA and Airline Vacation Packages: It is no secret that airlines and hotels have been hurt by the pandemic.  There are some sweet short-notice vacation packages available right now.  Check out AAA.com, JetBlueVacations.com, and AAvacations.com to name a few, and save big money!  If you have points with your preferred airline, start with them.
8. Read Both Positive and Negative Hotel Reviews: Try booking.com, tripadvisor.com, and kayak.com for domestic travel.  For same-day rooms use hoteltonight.com.  It is a money-saving, excellent FREE APP to download onto your smart-phone to save big $$$.
9. If Driving, Schedule a Tune-up, and Map Your Journey in Advance: A good way to avoid getting into a spat with a spouse or loved one, lol.  There is nothing worse than a car breaking down or getting lost on a road trip.  My preference is WAZE over Google Maps.  WAZE (owned by Google) downloads faster and has an information-sharing agreement with over 800 US cities and international countries.  Waze also warns you about upcoming speed traps, red-light cameras, and debris on the road. 
10. Try to NOT Check Bags: Not if, when flights get changed or canceled last minute, it is much easier to adapt when you don’t have to retrieve your checked bag. 
11. Call Alternate Phone Numbers:  If you get stuck at the airport because of a canceled or changed flight, everyone rushes to the gate or calls the general phone number.  The smart move is to buck the trend and call the airline rewards number and/or international number to change your flights.
12. Consider Using a Professional Travel Agent:  Covid-19 has weeded out many of the weak travel agents.  There are hotels that share their room booking commissions with the travel agent, so it does not always mean more money out of your pocket.  Also, most travel agents have access to “The Apollo System” which allows them to access multiple airline sites at the same time, which makes it easier to rebook your flights and save money.

I have spoken with family friends who haven’t been away since covid-19, and some say they are a little rusty regarding travel.  Sometimes people put too much pressure on themselves to have a good time in this situation.  Planning in advance can help ensure a smoother summer vacation.  Have a fabulous trip and enjoy your summer!

The U.S. national emergency to respond to the Covid-19 pandemic ended last week as President Joe Biden signed a bipartisan congressional resolution to bring an end to it after three long years!

The national emergency allowed the government to take sweeping steps to respond to the virus and support the country’s economic, health, and welfare systems.  Some of these emergency systems have been wound down while others are in the process of being phased out.  I have no doubt there will be bumps in the road trying to unwind programs, such as the shakeout from the Covid-19 loan forbearance programs.

Does this mean that Covid-19 is over?  Not really, as Americans are still dying from this virus every week.  Arguably, 1.13 million Americans have perished directly or indirectly from Covid-19 over the past three years, which I call “the Covid-19 era!” 

There is no doubt it has been an unforgiving three years of Covid-19 and its ripple effect on our economy and families.  You would be hard-pressed to find an American that hasn’t been affected by Covid in one way or another.

On the positive side, there are some silver linings.  In some ways, Covid-19 has been an accelerant, meaning it has expedited trends that were already starting to emerge. 

My top 10 Covid silver linings include:

1. Remote Work Being Universally Accepted: More time working from home leads to less commuting and a better quality of life with more free time for the family if budgeted for properly.
2. More Disposable Income for Salaried Workers: Working from home between 2-5 days per week saves substantial time and money on a weekly basis.  In addition to commuting costs, working from home keeps purchasing several outside meals per week and improves the possibility of eating healthier. 
3. Opportunity for Better Work-Life Balance: With the extra time saved, parents can spend more time with children and attend school events such as plays and sports during work hours from time to time.
4. Increased Efficiencies: The emergence of Zoom like videoconferencing and e-signing documents has improved communication, efficiency, and effectiveness in many fields.
5. Less Junk Mail: Have you noticed how much less junk mail you receive from the post office and your email box?
6. Birth of “The Financial Wave:” This column started as a weekly Covid-19 briefing I emailed to clients, friends, and family until someone forwarded said briefings to Wave Editor Mark Healey, who called and asked me if I was interested in starting a new Wave Financial-based column.
7. Nurses Getting the Recognition They Deserve: One of the most significant silver linings is nurses being hailed as heroes, which they are!  The next step is to significantly raise their salaries commensurate with the amazing work they do taking care of us!  Doctors could not function and do their jobs without nurses helping health recovery strategies come to fruition!
8. Forced Creativity and Problem-Solving: Covid-19 created new lifestyle shifts for commuting, mixing business home offices with family life, and technical problem-solving.  I have several clients and friends that have become YouTube self-help experts!
9. New Hobbies Have Emerged:  With forced extra free time over the last 36 months, there have been shifts to pursue hobbies that we thought we would never have time for. 
10. More Focus on Well-Being: This one has affected me.  Pre Covid-19, I rarely got to sleep before midnight nor 7 hours of sleep per evening.  Covid has nudged me and many others to move up well-being on my priority list. 

The Biden administration is proposing new automobile pollution limits that would require as many as two-thirds of new vehicles sold in the United States to be electric by 2032!

On a state level, California has taken it further, as they are requiring 100% of ALL new cars sold in 2035 and beyond be zero-emission vehicles, which include battery electric vehicles, plug-in hybrid electric vehicles, and fuel cell electric vehicles.  Oregon and Washington are following suit. 

The fact that 47 other states have not yet made a commitment, and with the average lifespan of a car in the United States pegged at about 12 years, there will still be a need for gasoline for decades to come.  The gasoline demand should start to drastically reduce by 2030 going forward.

You might be asking yourself at this point, what does this all mean?  There will be many hidden costs during our national quest to go 100% electric:

1. Gas Service Stations Will Close:   California’s shift away from gas-powered vehicles could mean as many as 80% of gas stations would be unprofitable by 2035!  The state currently has about 250,000 station owners and employees.  There will be many job losses across America during this transition.
2. Crumbling Infrastructure: Recently, a lower Manhattan parking garage collapsed as a four-story Ann Street structure caved in, leaving cars stacked atop one another and rubble down to street level.  The garage manager was killed, and 5 employees were injured.  One of the reasons was too much weight on the rooftop.  This problem will not be going away as electric cars, due to their heavy car batteries, weigh much more than gas-powered vehicles.  For example, the battery of an electric GMC Hummer weighs 2900 pounds, roughly the entire weight of a Honda Civic.
3. New Regulations Are Needed: Because electric cars weigh much more than gas-powered vehicles, building regulations and standards must be reviewed and the bar raised for parking garages, bridges, and the double-decker roads that are found in most big cities across the country.
4. Electric Battery Replacement and Disposal:  Depending on what source you trust; the typical EV battery will need to be replaced every 3-10 years.  Batteries may degrade faster in hotter climates as heat adversely affects EVs.  EV battery replacement costs range from $5,000 to $20,000 based on the pack, size, and manufacturer.  A Tesla Y battery costs $20,000.  The length and wording of electric vehicle warranties will be critical going forward!  If a battery fails during the warranty period, the dealer will have to replace that battery free of charge. 
5. Precious Metal Shortages:  The lithium-ion batteries found in EVs depend on 5 critical minerals; lithium, cobalt, manganese, nickel, and graphite.  Ramping up EV production that quickly will create domestic supply shortages.  China knows this and has been siphoning natural resources (metals and minerals) from Africa for decades.  This has enabled China to lead the world in EV production.

The combination of the Manhattan parking garage collapse and a casual conversation I had with a nurse named Grace triggered the writing of this column.  Grace just purchased her Tesla Y in January of 2023 because her Mercedes came off lease, Tesla had decreased their prices and she “wanted to save money!” 

I asked her how it was going, and she gave me a surprisingly long answer and made several key points I didn’t think about, as I still drive a gas-powered car.  I expected to get a quick response that she was happy and saving money.  The points that she made were:

1. Geico Raised Her Premiums by Almost 30%: This was a surprise to hear.  I asked why and she said she called Geico, and they said it was because of the increase in the price of parts for Evs.
2. The Cost of Home Charging Installation: Grace said in the past, when customers bought Teslas, they received a home fast-charger with the car.  This was not the case for her.  She bought an aftermarket trickle charger that took days to charge as it charges only 3% per hour.  She also couldn’t use a blow-dryer while charging her car without blowing fuses.  She was quoted $1500 by an electrician to install the system, which did NOT include materials, permit, inspection, and a warranty.  She decided to abort that mission and tries to charge her Tesla at the North Shore Hospital garage (there are only 6 charging stations in total) during the 3 days she is working 12-hour shifts.  I know of parking garages that charge an extra $100 per month and charge the car for you.
3. She IS Saving Gas Money Weekly:  Nurse Grace was spending $50-$60 per week for gas commuting to work.  She now pays about $15 per week (measured in kilowatts) to charge her car at work when she can find a charging station. 

My Take is that we do need to transition to electric cars; however, for my Financial Wave readers, it is a little early to buy one now and expect to save big chunks of money every week. 

Over the next 2-4 years, there will be a proliferation of new EV cars introduced to the market which will bring down new EV car sticker prices.  As charging stations get funded and built and the technology advances, the kilowatt charges and charging times will lessen making the EVs a better purchase in the near future than they are now.  

This past Monday, May 1^st, was National College Decision Day, a significant day for high school seniors across the country!  It is the deadline day for seniors to decide which college or university they will attend in the fall of 2023.

For many students, College Decision Day can be a day of celebration!  For others, it can be a day of disappointment, as they receive letters of rejection and/or letters of waitlist notifications.  Either way, this date is the culmination of great student and parental planning, or the lack of planning, which has yielded their “Decision Day” results!

Aside from buying a home, a four-year college degree could be the largest expenditure that a family will make in their lifetimes.  Looking back to my own college planning experience, I was fortunate that my parents did plenty of research (not easy as the internet was in its infancy) and spent money they didn’t have to get me an S.A.T. tutor and drive me to visit many schools such as Lehigh University in Bethlehem, Pa., which I decided to attend.  These decisions have a profound impact on the rest of your life as I have two of my best friends in the world from my four years at Lehigh.

During this time, there were no college coaches, so my parents had to fend for themselves as college guidance counselors were mostly teachers handling college admissions part-time in addition to teaching multiple classes.  My parents stumbled upon “The Common Application” which was the most efficient way for us to apply to numerous schools. 

Mistakes with the first student can have a major ripple effect for younger siblings and for parents financially.  Over the years, I have seen many situations, due to poor planning, where parents felt they had to borrow from their own retirement to fund their children’s education!

Fast forward to the current Covid-19 era and wow has the game changed! And it has gotten much dirtier!  The reason I say this is because the colleges have stacked the deck in their favor as they take advantage of the emotional attachment parents have to their children!

When planning with my clients, it is ALWAYS a good exercise to explain to them what the insurance company’s point of view is.  For example, take group health insurance for a business owner with 10 employees.  There are 2 employees that are nudging the business owner to offer a group health insurance option for them.  The insurance company believes that these 2 employees will be “buying a claim,” meaning they have pre-existing health issues and will hit the insurance company with a claim the first month.  This is why health insurers have “participation rules,” meaning they require at least 50% of the 10 eligible employees (in this case 5 of the 10) must enroll in the plan from day one.  The insurance company is thinking that the extra 3 employees are healthy and will help defray early claims costs. 

It works the same with colleges, so we need to examine their point of view.  To dig deeper into this, I interviewed Hans Hanson, owner of www.MycollegeLogic.com.  I first asked Hans how the game has changed over the last 20-25 years, and wow, his answers were eye-opening!  He said that the “BIG BUSINESS of college admissions has transitioned into a profitable business unit WITHIN the colleges.” 

These are the reasons why:

1. Application Inflation: Application inflation results from the admissions strategies of colleges trying to boost their selectivity!  In 2021. Applications increased by 1.6 million over 2020 (at an average cost of $75 each) without an increase in the number of applicants.  This results in lower acceptance rates and the perception of higher selectivity and value.  For example, school A usually receives 20,000 applications for 10,000 spots, a 50% acceptance rate.  Now they receive 40,000 applications for the same 10,000 freshman spots so their acceptance rate just dropped to 25%.  This works well for colleges and adds to student and parental stress!
2. The Surge in Deferrals:  Hans says “deferral” is the new hot word in today’s world of college admissions and describes the college’s sales and marketing intentions.  With thousands of extra applications to review, this has created the advent of “the 10-second denial!”  Admission counselors have 4 button options to push; Accept, Deny, Defer, or Waitlist.  Deny is the fastest option; however, the deferral puts the student back into the pool and gives colleges more time to see if there is a better student option who perhaps, can pay the full sticker price!
3. Admission Counselor Evaluation: Counselors are ranked by their “yield rate.”  The college yield rate reflects the percentage of students accepted who enroll.  For example, Ivy League schools have a yield rate between 65%-70%.  This is where ED, or early decision comes in.  This was created so admission counselors can be confident that most ED-accepted students will enroll.  Colleges believe any other option than early decision means the student has a preferred destination somewhere else.  If a counselor’s yield rate is 75%, they get promoted.  If under 50%, they get fired!

Speaking with Hans, our past strategies would NOT work today.  Hans preaches choosing 6 or 7 schools and digging deeper instead of the distractions of applying to and completing specific essays for 12-15 schools as we did. 

You might be asking yourself what does this all mean.  My take is that we are in the era of specialization!  There are now “science camps” and “art and theatre camps” which are cottage industries serving a public with high demand.  The same is true with college admissions.  There are parallels between college planning and dating.  In order to “tip the scale” in your favor and have colleges chase/pursue your student instead of the other way around, it is essential to consider hiring a college admission coach by 10^th grade at the latest!  For more information or an introduction to Hans, feel free to email me at Rob@InsuranceDoctor.us.

The Federal Reserve Bank is the central bank of the United States and arguably the most powerful financial institution in the world!  The Federal Reserve Board meets every 6 weeks (their next meeting is May 2^nd and 3rd) to evaluate and promote the stability of our financial system and minimize economic risks.  Their main goals are to:

1. Stable Prices
2. Maximize Employment
3. Moderate Interest Rates
4. Manage Inflation

The biggest weapon the Federal Reserve has is to set and manage fixed interest rates, which in turn expand or contract the economy.  The Fed has increased short-term interest rates called “The Federal Funds Rate” 8 times since March of 2022.  It’s easy to forget that the Fed was holding interest rates at close to zero in the first quarter of 2022.

The ripple effects of the rapid interest rate increases are far-reaching!  Some current bank CD rates, fixed annuity rates, car loans, student loans, and mortgage rates have doubled in the past 12 months!  The changes have occurred so quickly that many consumers and advisors have had problems keeping track of what is going on.

That being said, I had heard about upcoming new mortgage pricing model changes in May, so I decided to interview loan expert Sal Tomaselli, President and Founder of Queens-based Professional Mortgage Solutions Inc., to get into specifics to share with my “Financial Wave” readers.  Here is what Sal had to say:

Closing costs are an unavoidable part of the mortgage process. But as of May, some of those costs may change and even increase for some homebuyers and refinancers.  This is due to recent changes made by the Federal Housing Finance Agency to its pricing framework, which will affect the upfront fees that come with conventional mortgages, but not FHA, VA, or USDA loans.

If you are considering a conventional loan for your home purchase or refinance this year, here is what the changes mean for you:  

1) Higher-credit borrowers may see more variance in fees. 

Previously, borrowers with credit scores over 740 saw the same pricing. Now there will be added brackets with varying fees for those with scores between 750 and 759, 760 and 779, and 780 or higher.

2) Lower credit borrowers won’t be penalized as harshly. 

With the old pricing arrangement, borrowers with a score of 639 or lower, paid fees as high as 3.75%. The new structure reduces the maximum fee to 2.875%.

3) Cash-out refinancing may get more expensive.

The highest fee for cash-out refinances was previously 2.125%, but it will now exceed 5% for some borrowers.

4) Buying a multi-unit property might be less expensive. 

The fees for purchasing a two- to four-unit property range from 0.0375% to 0.625% under the new pricing model, whereas previously the fees were 1% across the board.

The new fees can be complex, and they vary based on the size of the loan, your credit score, and your down payment. If you’re curious about the fees you can expect for your upcoming purchase or refinance, don’t hesitate to get in touch.

I was also pleasantly surprised to learn that Sal’s mortgage business model has similarities to my insurance practice.  Sal is an independent broker, meaning he has 35 lenders instead of 1 or 2.  Just like insurance, an independent broker will always have a better feel for a rapidly changing market because they track the movement in rates and product types across numerous companies. 

With 35 options, Sal has a mix of traditional loan options and then “niche companies” to place business with when there are higher risks, such as a buyer of a multiple family dwelling that will not be living there.  When the landlord doesn’t live in the building/house, there is less control and more risk of tenants not paying their rent, which can trigger mortgage defaults. 

Sal clearly explains key factors such as credits scores, number of units and loan to value which he considers when assessing risk, and where he should place the loan.  For example, a $500,000 property with a $250,000 down payment is much less risky than a $50,000 down payment.

Professional Mortgage Solutions Inc. is located at 62-81 Woodhaven Boulevard Rego Park, New York 11374.  Sal can be reached at 718-457-4290.

Buying a home or an investment property is one of, if not, the biggest expenses that one will incur in their lifetime.  These decisions are critical and what is also critical is utilizing the advice of savvy experienced brokers who have your best interest in mind!  For more information, feel free to reach out to me at Rob@InsuranceDoctor.us.