New Educator
Financial Wellness
Challenges & Solutions
Carrie Murray
Vice President, Education & Awareness
The Horace Mann Companies
Jim Yale
Vice President, Association Relations
The Horace Mann Companies
Jeff Vose
Regional Superintendent of Schools,
Sangamon and Menard Counties, Springfield, IL
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
1
Educator Advisory Panel
• Educators face multiple challenges to
their financial well-being and retirement
readiness
• Educator Advisory Panel gives us
feedback on the issues faced inside and
outside the classroom
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
2
Burdened by Debt
Average Teacher
Starting Salary
Average College
Graduate Loan Debt
$36,141*
Monthly
Take Home
Pay
$35,000 **
13%
Monthly Student
Loan Payment***
13% of take-home pay
could be spent paying
down student loan debt
for the next ten years
“We make less, so you just have
to budget what you can afford. I have very
little extra money for savings.”
“Early in their career, teachers
are paid significantly less and it makes
it a struggle to pay off student debt.”
- Educator, Horace Mann Educator Advisory Panel
- Educator, Horace Mann Educator Advisory Panel
Source; * National Education Association, 2012-2013; ** U.S. Federal Reserve, Edvisors, National Education Association;
*** Horace Mann Educator Advisory Panel, 2015
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3
Out-of-Pocket Expenses
85%
92%
$500
of teachers spend
their own money on
classroom supplies*
of teachers buy
instructional
materials for their
students*
Each teacher
spends an average
of $500 per year**
Source: * Horace Mann Educator Advisory Panel, 2015; **2013 NSSEA Retail Market Awareness Study, Horace Mann calculations
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
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Lower Earnings…
and the gap continues to widen
12%
Salary
gap for
teachers
Other Occupations
Teachers
(with similar educational
requirements)
Teacher salaries are 12.5%
less than the salaries of
professionals in occupations
with similar educational
requirements.*
Unfortunately, there’s
evidence to suggest that this
gap widens with time.
“One of my biggest worries is retirement.
Because my salary is less to begin with, my
retirement pay will be significantly lower.”
- Educator, Horace Mann Educator Advisory Panel
Source: Economic Policy Institute
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5
Teacher Shortage
Increased Demand for Teachers
Schools continue to reinstate classes and programs
terminated during the Great Recession
Decreased Supply of Teachers
Teacher attrition remains high and is the single,
biggest contributor to the shortage
35%
decline in
teacher prep
programs
2009
2/3
Two-thirds leave
the profession
before retirement
because they
are dissatisfied
2014
Sources: “America has a teacher shortage, and a new study says it’s getting worse” by Joe Hellm, Washington Post,
9/14/16,and “A Coming Crisis in Teaching? Teacher Supply, Demand and Shortages in the U.S., Learning Policy Institute.
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6
Addressing the Retention Issue
“In times of shortage, policymakers often focus attention on
how to get more teachers into the profession, but it’s
equally important to focus on how to keep the teachers we
do have. Reducing attrition in half, from 8% to 4%, would
virtually eliminate overall shortages.”
- Leib Sutcher, Learning Policy Institute
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7
Solving Financial Issues Helps Retention
Educator Financial Issues
• Not saving enough (or at all)
• Uncertainty about pensions &
Social Security
• Not making enough to pay off
student loan debt
• Spending own money in the
classroom
Effect on School Districts
• Strains ability to attract & retain
talent
• Diminished employee morale
• Lower productivity
• Employees working later into
life, resulting in higher benefit
costs
Helping students focus on their financial success can help
employers improve retention of new educators
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
8
Planning Needs Evolve over Time
Build toward financial goals
As we get older, our financial planning
objectives change… as do the solutions
we choose to meet those objectives.
New
Educator
New
Graduate
Established
Educator
Preparing
to Retire
Retired
Educator
Protect against losses
Risk management is important at all
ages… but the assets we have to
protect generally grow over time.
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9
Create a Plan to Overcome Obstacles
Solve for barriers
Meet financial goals
Give students the
information they need to
help address concerns –
and put money back in
their pocket.
Redeploy savings to
protect against
unnecessary loss and
plan for long term financial
goals.
Financial
Literacy
Asset
Protection
Student
Loans
Classroom
Expenses
Retirement
Prep
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10
Millennial mindset
• Frequently talk about savings and retirement
• Expect to fund most of their retirement
• Want retirement education and advice
• Guess at how much they will need
• Focused on the “Now” – money for experiences
and enjoying life
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
11
Lessons to Learn
Budget
Credit
Protect
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Save
12
Creating & Adhering to a Budget
•
•
•
•
•
Understand how “take-home pay” is calculated
Keep track of regular expenses
Understand discretionary spending
Set a regular amount to save
Set short and long-term goals
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
13
Establishing & Managing Credit
Budget
Credit
Protect
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
Save
14
Establishing & Managing Credit
• Establish different types of credit
• Charge what you can afford to
pay off each month
• Limit number of cards
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15
Establishing & Managing Credit
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
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Establishing & Managing Credit
• Credit scores range from
300 to 850
• Affects borrowing power
• Pay bills on time
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
17
Establishing & Managing Credit
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
18
Managing Student Loan Debt
$1.2
Trillion
Student loan debt
nationwide tops $1.2
trillion — more than
credit card debt or
auto loans
$35,000
Average student
loan debt is more
than $35,000 —
which can be close
to a full year’s
salary for a new
teacher ($36,141)
Sources: U.S. Federal Reserve, Edvisors, National Education
Association, Horace Mann Educator Advisory Panel, June 2015.
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
71%
71% of educators
agree: “For many
young teachers
today, student loan
debt is the difference
between wanting to
continue to teach
and wanting to
change career
paths to a career
that pays better.”
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Student Loan Solutions
Remove
Reduce
Redirect
Under certain
conditions,
student loan debt
can be forgiven
Repayment &
refinancing options
may help lower
payments
Savings can be
redirected toward
other financial goals
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
20
Removing Student Loan Debt
Your students may be eligible for
forgiveness if they:
Remove
We can help your students
navigate the three federal
government loan forgiveness
programs and remove some or
all of their student loan debt.
• Become a full-time teacher in a
Title I school who teaches or will
teach for five consecutive years;
• Become a full-time employee in
a qualifying public service
organization who makes 120
qualifying loan payments, or
• Are a Perkins or Parent Plus
borrower.
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
21
Reducing Student Loan Debt
Income-based federal repayment
plans could make new educator’s
payments more manageable.
Reduce
Loan repayment or refinance
options may reduce
your student’s monthly
payments
Refinancing could:
• Lower their interest rate;
• Lower their monthly payment,
and
• Increase monthly cash flow that
can be redirected to retirement.
Student loan refinancing is provided through a third-party financial services firm. Refinancing a federal student loan will make the borrower
ineligible for loan forgiveness programs and could lengthen the repayment period of the loan.
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
22
Redirecting Student Loan Debt
Redirect
New educators can invest these
savings for their future. The key is
redirecting that money in order to
reach their retirement goals.
Saving just a small amount (for
example, $137/month) can add up
over time.
We can help your students
redirect savings
from their student loan
payments to
achieve their retirement goals.
Assumes 6% annual earnings and no withdrawals. Results are
hypothetical for illustrative purposes only and do not reflect the
performance of any specific investment.
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
23
Insurance
Budget
Credit
Protect
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
Save
24
Auto Insurance
Rates can be influenced by:
• The type and age of car you drive
• Where you live
• Length of your commute
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
25
Home/Renters Insurance
The national average for renter’s
insurance is $15 a month.
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
26
Life Insurance
Insurance could cost more if wait to
purchase when you’re older
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27
Pay Yourself First
Budget
Credit
Protect
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
Save
28
Pay Yourself First
$10 smoothie
& a side
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29
Pay Yourself First
What happens with a
$5 smoothie
& a side instead?
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30
Pay Yourself First
$223,285 +
a smoothie and a side
Assumes $5 a day for 40 years at 5% return
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
31
Starting Early Makes a Difference
Savings at age 65
Each investor started with $0. Each investor contributes $150 a month to start and increases the contribution each year by 6 percent.
A 5 percent rate of return is assumed.
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
32
Fill the Income Gap
Fill the gap
Year 1
Working years
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Year 30
33
Retirement Planning
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
34
Retirement Planning
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35
Retirement Planning
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
36
Retirement Planning
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
37
Consistency is Key
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
38
Keep More – Save More
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
39
How Horace Mann Can Help
Student
Loan Debt
Student Loan
Solutions
Workshop
Out-of-Pocket
Spending
Donor’s Choose
Workshop
Placement
Productivity
Retirement
Readiness
State Retirement
Workshop
Making
Ends Meet
Financial
Success
Workshop
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
Retention
40
What’s Next?
• Contact us
Jim Yale, Vice President –
Association Relations
[email protected]
(217) 788-5182
• Visit horacemann.com/workshops
• Visit Horace Mann at the
AACTE Annual Meeting
FOR INSTITUTIONAL USE ONLY. NOT FOR USE WITH THE PUBLIC.
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