Banking

The recession has had a different impact than expected, experts say. In earlier periods of low inflation and a slowly improving economy, there was less attention to becoming debt-free and solvent, they say.

Among the pertinent factors is a lack of inviting investment alternatives. Savings accounts pay next to nothing and the stock market already is at lofty heights, according to a report recently released by the bank consulting firm Moebs Services Inc. The report looked at average balances in U.S. checking accounts and compared them with the same data from 25 years ago. The current average was $4,436, more than double the $2,100 posted 25 years ago.

The average balance in checking accounts during good economic times, with unemployment and inflation low, is about $1,400, the report said. With less cheery economic times, consumers tend to be more wary of spending and checking balances rise to the neighborhood of $3,000 or more. In 2007, for instance, the average balance was $788. That was just before the Recession caused a near-meltdown of the country’s economy, the report noted.

On the downside, the reluctance to spend has slowed the recovery. Spending usually accounts for about two-thirds of economic growth, said Moebs economist G. Michael Moebs, who heads the company. The firm’s report on bank balances was based on data from Federal Reserve figures for 2,800 banks and credit unions.

The hoarding trend also affects financial institutions, who lose income from overdrafts. Financial gurus are advising those institutions to expect big funds withdrawals when consumers are convinced that the fallout from the recession is over and they are safe to take out their money for mortgage-reduction, vacations or big item purchasing.

An article on the Moebs report in the Los Angeles Times quotes UCLA economist Lee Ohanian as saying the country may still be plagued by troublesome leftovers from the recession. He notes that even though employment is up by some 200,000 jobs in each of the past five months, growth in production is at less than half its usual rate. He relates the figures to the fact that the employment-to-population ratio still is low.

The recession caused a lot of serious reflection about personal finances, Ohanian said. People who had racked up too much debt pre-recession and suffered the consequences now are being much more cautious about what they do with their money.

Even now, with a return to near-normal employment and better incomes for many Americans, it likely will take awhile before full confidence in the economy is restored. Most experts see this as a good thing over time. Adjustments for both consumers and financial institutions will take time, they say.

Women are working more years than they used to before retiring, and that fact will change the overall retirement picture in the United States, according to Age Wave, a company that focuses on issues involving the elderly.

Over the past 20 years, the number of older women in the workforce has increased significantly. In 1992, 23 percent of the over-55 working group were women; by 2012, the figure had risen to 35 percent. By 2022, the number will have reached 82 percent, Age Wave predicts.

Finances push the trend to a degree. Women have traditionally worked for less than their male counterparts and have less in their retirement savings. But enjoyment of their work also is a factor. A survey conducted by the company in partnership with Merrill Lynch Global Wealth Management found that social opportunity, mental stimulation and the physical benefits of working topped the list of reasons for prolonging employment. Only 31percent of the respondents put financial need in the top spot. With life expectancy at 80 to 90 for many Americans, the thought may be that spending 20 to 30 years in full retirement is not an attractive alternative. There is more to life than 50 hours a week in front of the tube, as reported in a recent survey of the 65-plus population.

Baby boomer women are four times more likely to be working into their sixties than their own mothers were 30 years ago, as financial stress puts retirement out of reach. ~ www.news.com/au

Women who are part of the “boomer generation” are different, experts say. They are more adaptable and more politically savvy. Some of them have taken an employment break for rearing families and they’re ready to work outside the home again. They have tended, too, to marry men closer to themselves in age, and that affects retirement, since most couples retire within a year of each other.

The longer work term for women has implications for employers, said April Wu, a research economist in Boston College’s Center for Retirement Research. The studies show that many older women will be found in the health care arena, as nurses, physical therapists, occupational therapy and patient advocacy. They also find niches in the nonprofit world.

The feminine involvement in how retirement money is spent is likely to grow, says Kerry Hannon, author of “Great Jobs for Everyone 50+”Finding Work That Keeps You Happy and Healthy.” They will likely have a larger role in the distribution of $59 trillion in wealth that will be distributed to heirs, charities and taxes. Although men currently are 58 percent more likely to be the primary contact with a financial advisor, women are gaining.

Hirers often see advantages of hiring mature women over the hoodie-wearing younger job applicants they see, Hannon said. Many of the older women also have gained the know-how and the confidence to strike out on their own.

Changes will be gradual, but unless something short-circuits the current trends, you can expect to see more older women in the workforce.

Most credit cards in the United States feature a magnetic strip that is easily captured and copied. But in the rest of the world, the EMV chip has largely succeeded the magnetic strip as a method of making credit cards more secure. And the U. S. is fast making the switch.

American Express, Discover, MasterCard and Visa all have announced plans for joining the move to an EMV chip-based payment infrastructure, according to the Smart Card Alliance. In contrast, more than 84 percent of cards issued in Western Europe already have the chip-and-Pin technology.

The chip has been integrated into the merchant’s handling of sales. In restaurants, the waiter often brings the bill on a hand held card reader. The customer inserts a credit card into the reader, enters her PIN and the transaction is complete. The customer never loses control of the card and the chip technology has highly secure built-in safeguards against theft of the card’s information.

The chip embedded in a card has the same computing power as an X286 computer, according to Jack Jania, vice president for strategic alliances at Gemalto, which produces the chip-enabled cards and the infrastructure to support them. Each chip has an operating system and several apps, depending on the level of security, whether it works with signatures or with PINS.

The chips, not surprisingly, cost more – $1.25 to $2.50, compared with 25 cents for a traditional magnetic strip. But the added security is worth the cost. Fraud prevention has been the impetus behind the chips. American cardholders have been particularly vulnerable to fraud. The introduction of the chip, along with other anti-fraud measures over the next couple of years, is expected to make big inroads into the problem.

BMO’s Diners Club, which has headquarters in Canada, where the chip has been long entrenched, was the first to introduce the chip onto the American scene, followed by the United Nations, the U.S. State Department and Andrews Air Force Base, all of which have many international interactions. Other American companies, including popular national merchants, are rapidly adopting the technology.

Some American banks now offer chip-implanted cards to top corporate accounts, but don’t promote them below that level, to the chagrin of some travelers. The situation is aggravated for them because some merchants in foreign countries shun America’s traditional magnetic strip cards. As the complications multiply and more Americans find themselves in long lines waiting for a teller to process magnetic strip cards, the impetus for the switch will magnify, industry leaders predict.

Both for the convenience in travel and for the added benefit of more anti-fraud security, the chip is coming and it can’t come too soon for many Americans.