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The Most Anxious Generation Goes to Work

New college graduates report higher levels of anxiety. How managers can help them steer past fear and improve work performance—and how young workers can work to calm their anxiety and be more effective.

Note from Cornerstone:

Over the last 15 years there has been a noticeable uptick in client conversations about the anxiety their children are experiencing. I am not an expert in this area and won’t pretend to know anything other than there appear to be a variety of behavioral and chemical challenges that can be mistaken for this feeling. But in attempting to understand what is occurring, anxiety seems to be the most common concern.

The best I can do is let concerned parents know that I am hearing about and observing more of this. Thanks to the Wall Street Journal article below, I have a little more validation. It appears that recent college graduates are the most anxious of all previous generations, and two-times greater than how baby boomers currently feel. I also understand that anxiety is not uncommon. Perhaps part of the increased reporting can be tied to a higher level of self-awareness among all generations.

While not a solution to any one client’s concerns about what this means, it does help to know that many other parents and children are sharing this same experience. I hope you find some value in the article.

Rich Arzaga, CFP®

The Most Anxious Generation Goes to Work

By Sue Shellenbarger, Wall Street Journal

May 9, 2019

Michael Fenlon’s company is one of the nation’s biggest employers of newly minted college grads. He’s watching a tidal wave approach.

College presidents and deans tell him repeatedly that they’ve had to make managing students’ anxiety and other mental-health issues a priority. “They’re overwhelmed with the demand for mental-health services on their campuses. I hear this again and again. It’s really striking,” says Mr. Fenlon, chief people officer for PricewaterhouseCoopers, which hires thousands of college grads each year.

As Generation Z enters the workforce, more young recruits are reporting anxiety than any other generation. Some 54% of workers under 23 said they felt anxious or nervous due to stress in the preceding month, according to a 2018 American Psychological Association survey of 3,458 adults 18 and over. Close behind are millennials, with 40% reporting anxiety—surpassing the national average of 34%.

One driver of the trend is that 20-somethings are simply more willing to talk about and ask for help with emotional issues.

Nevertheless, their anxiety is causing some baffling workplace behaviors—such as ghosting the boss. And employers are trying new ways to help anxious new hires stay calm, clearheaded and willing to speak up at work.

One executive was dismayed when a young employee missed two of her first five days on the job without calling in, says Adrian Gostick, a Pleasant Grove, Utah, consultant who advised the executive. In a meeting, the employee admitted to paralyzing anxiety, including panic attacks and stomach aches, says Mr. Gostick, co-author of “The Best Team Wins.” When the executive reacted with empathy, the employee seemed comforted and started showing up regularly.

Other managers take the opposite tack, using anxiety as a weapon to get employees to perform—a tactic likely to backfire, Mr. Gostick says. One in four Gen Z employees say they’d quit any company where the boss managed by fear, according to a survey of 1,000 18- to 23-year-olds by InsideOut Development.

Anxiety causes employees to withdraw, turn negative and overreact to stress. “If you suffer from anxiety, you lose focus,” says Dan Schawbel, author of “Back to Human” and a workplace researcher. “In the next one to five years, employers will start to get serious about this, because the cost to employee engagement is really high if you don’t have programs in place.”

PwC is encouraging employees to discuss mental-health issues more openly, Mr. Fenlon says. He recently did an internal podcast on getting help, and disclosed that his own mother suffered from depression. “As a kid, I never spoke about it. In retrospect, why didn’t I?” he says.

Some 13,500 PwC employees took part in a recent online meditation session. The company also is training managers in running meetings so everyone participates. This includes appointing one person to make sure reticent employees speak up.

Anxiety triggers excessive worrying, and a fight-or-flight response that can block the brain’s ability to process stimuli. Stacey Snyder, a 25-year-old business analyst, says she suffers anxiety before making presentations or getting feedback. Then she second-guesses herself afterward, thinking, “I should have done this instead,” she says.

Meditation and mindfulness training offered by her employer, Herman Miller , a Zeeland, Mich., furniture-design company, has helped Ms. Snyder be less reactive to stress. If someone asks her to drop everything to do a report right away, she takes a minute to think about the request rather than refusing on the spot. That equips her to respond calmly with a compromise offer.

Herman Miller broadened its well-being programs three years ago to increase its emphasis on mental health. The company stations social workers at its plants to offer confidential counseling, and has trained 110 employee volunteers in mental-health first aid so they can notice signs of anxiety in colleagues and offer help, says Kerri Ploeg, corporate health manager.

Among the trainees: Angie Martin, a 30-year-old proposal manager, who says she has learned to cope better with her own anxiety and empathize with others who are struggling. “I’m glad we’re talking about it and getting the tools we need,” she says.

Many managers see social media as a major cause of Gen Z anxiety, and try to create a work environment free of the social comparisons and competition it breeds. As head of human resources at Vayner Media, a global agency based in New York, Claude Silver dissuades young employees in one-on-one coaching sessions from comparing their career progress to others’.

“They’ll ask, ‘Am I getting my promotion in three months? I want to make sure I get there, because Johnny got there last month,’ ” says Ms. Silver, whose title is chief heart officer. She refocuses the conversation to their own unique strengths. She also trains managers to notice employees’ body language when giving feedback, and to use calming rituals such as a friendly handshake to ease anxiety. “I want to create a culture of belonging, where people feel physically and psychologically safe,” she says.

Research by Harvard Business School professor Amy Edmondson shows psychological safety—a shared belief that it’s OK to take risks or make mistakes without fear of being embarrassed, rejected or punished—is important in helping teams perform well. It’s even more important when working with anxious employees, says Dr. Edmondson, author of “The Fearless Organization.”

To foster a sense of psychological safety, she coaches managers to show humility, admit mistakes and avoid casting blame on individuals for systemic failures.

Research on the anxiety-inducing process of uncovering medical errors at a hospital shows team leaders must choose their words carefully, Dr. Edmondson says. “If someone calls a problem a screw-up, that makes your brain say, ‘I’d better be quiet about it.’ But if it’s called an accident, you think, ‘How can we prevent it from happening again?’ ” she says.

And rather than grilling staffers about whether they witnessed defects or hazards, appeal to their aspirations, asking, “Was everything as safe as you would like it to be?” Dr. Edmondson says.

Shifting employees’ attention to shared goals is what makes the difference, she says. “It raises creative juices, and makes people want to speak up.”

 

#CollegeEducation

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#PersonalAdvice

 

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Workshop: Five Ways to Mitigate Taxes on Highly Appreciated Real Estate Investments

You are invited to what should be an interesting panel discussion on five strategies that help mitigate or defer taxes on highly appreciated real estate investments. While the 1031 exchange is known by many, it will represent only one of the five strategies that will be discussed by the panel. I do not know of a time when all five strategies were available for discussion in one sitting.

Click here for the invitation or to register.

The panel is very smart – advanced thinkers, open to your questions during and after the workshop. There are two workshop dates scheduled over the next six week – two chances to hear this presentation. The first is February 19th in Pleasanton and then March 19th in Alameda.

#BayEastAssociation
#Real Estate
#Taxes
#TaxStrategies
#TaxSavings
#1031
#1031Exchange
#OpportunityZone

Five Ways to Pay for Grad School

My oldest daughter is in her last year of undergraduate studies and is looking ahead to graduate school. My youngest has been accepted to a number of undergraduate schools and is already thinking ahead to graduate studies. So, this topic is very close to my heart. I hope you find some value in it.
Rich Arzaga, CFP®

Courtesy of The Wall Street Journal
By Cheryl Winokur Munk

We hear a lot about college students’ loans. But graduate students build up debt, too.

Many students seeking graduate degrees need help footing the bill. But they often don’t know where to turn.

The bill can be hefty: The average cost of a year of graduate school (tuition and related expenses) was close to $25,000 during the 2016-17 academic year, according to a report from Sallie Mae, one of the nation’s largest private student lenders.

While some graduate students may have money left over in a “529” college-savings plan to pay for that advanced degree and a select few others will get the golden ticket—a tuition waiver plus a stipend for expenses, in exchange for teaching or researching at the school—many more won’t.

Here, then, is a look at a range of funding options for students planning to go to graduate school:

1. Grants/scholarships
To minimize what they need to borrow, grad students should explore any federal, state, school-based or organizational grants they might be able to use to defray the cost of their studies.

First, students must complete the Free Application for Federal Student Aid, or FAFSA—the government form for financial aid consideration. Certain graduate schools require that students also complete the College Board’s CSS Profile to be considered for aid from the university. (Graduate students generally are considered independent for financial aid purposes, meaning they won’t need to include their parents’ financial information.)

While federal grants generally are need-based, some may be available to students who are studying to fill a special need or discipline, according to Sallie Mae.

Sallie Mae offers an online search tool that gives students free access to 850,000 need- and merit-based graduate scholarships worth up to $1 billion. To register and receive alerts about scholarships that match their profile, students should visit the Sallie Mae site’s “Find graduate school scholarships” page.

2. Fellowships
Fellowships, available in many fields to help defray education costs, are generally based on academic achievement. There are different types of fellowship programs, but some include an internship or other service commitment. Fellowships are extremely competitive to get, but the benefits can include practical experience and professional development, as well as different types of financial support, such as tuition waivers, a stipend or housing assistance.

Students interested in exploring fellowship options should speak to their program chair. They also can contact professional associations and nonprofit research organizations within their field that fund fellowships.

It is a good idea for students to start looking for fellowship opportunities as soon as they decide to apply to graduate school so they don’t accidentally miss out on programs with early deadlines.

3. Assistantships/work study
Students pursuing advanced degrees may have opportunities to earn tuition waivers or cash (or both) by working as research and teaching assistants. During the 2015-16 academic year, students working as graduate assistants while pursuing master’s degrees earned an average of $10,500, while those pursuing research doctorates averaged $18,500, according to a report from the National Center for Education Statistics.

Graduate students also may find work through the federal work-study program. To be considered, they need to submit the FAFSA and indicate their interest in work-study.

4. Student loans
Grad students can borrow up to $20,500 a year in direct, unsubsidized federal student loans, with an aggregate limit of $138,500, including all federal loans received for undergraduate study. (Medical students have a higher yearly maximum borrowing limit of $40,500 and an aggregate limit, including undergraduate borrowing, of $224,000.)

Once students hit these limits, they can take out another type of federal loan, known as Direct Plus, up to their total cost of attendance.

To get a federal loan, students must first submit the FAFSA. Both types of federal loans offer certain favorable protections to graduate and professional students, such as income-driven repayment. But the interest rates on Plus loans are higher than direct unsubsidized loans and even some private loans, and they usually come with a higher loan fee. (The interest rate on Direct Plus Loans disbursed from July 1, 2018, to June 30, 2019, is 7.6% versus 6.6% for graduate or professional direct unsubsidized loans.)

Grad students also can borrow money from private student-loan companies, as well as nonprofit and state-based higher-education finance organizations, but they should be aware that these loans usually don’t come with benefits such as income-driven repayment.

Students, of course, should be careful about how much debt they take on. One rule of thumb is to take on no more debt than your expected annual salary, says Stephen Dash, chief executive of Credible, an online loan marketplace.

Students also should try to pay some of the interest on their loans while they are still in grad school, rather than waiting until they finish their degree. “Anything you can pay down while you’re studying is helpful because it will reduce the overall debt that you owe,” Mr. Dash says.

5. Employer reimbursement
Some people may be able to pursue a graduate degree while working full time, depending on the industry they work in, the particulars of their job and the degree they are seeking. Many graduate programs cater to working people by offering online and evening classes.

Even better, some employers offer tuition-reimbursement programs to help defray the cost of graduate school for employees. Students pursuing master’s degrees received an average of $6,200 in employer aid during the 2015-16 academic year, according to the National Center for Education Statistics.

Corporate tuition-reimbursement programs often come with restrictions, however. For example, some programs may require employees to work for the company for a certain amount of time or achieve certain grades.

#CollegeEducation
#CollegeFunding

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Why community college may be a student’s first and best path to her/his career

As my own family goes through our second and final iteration of the college search, majors, careers, and the rest, I continue to come across some very interesting information advocating the merits of community college.

My family lives in a hyper-competitive high school district, one of the best in the state of California. And yet, according to the high schools own placement records, almost 50% of these students will start post high school education in community college.

Most high school seniors don’t want to entertain this path. But numbers don’t lie.

I thought you might enjoy two resources I have come across that make the point that community college could be . The first is a link to a video titled Success in the New Economy. This is an interesting 9 minute video on the merits of community college. And why community college may be the best option for students seeking meaningful, higher-earning careers.

The second is the article below by Associated Press. I hope this perspective opens a few ideas for someone you know.

Big changes coming to key community colleges

By Dan Walters, Associated Press

California’s 114 community colleges are the Rodney Dangerfields of higher education, overshadowed by the state’s four-year universities and not getting much respect.

That’s true even though the community colleges’ 2.1 million full- and part-time students are more than three times the combined enrollments of the University of California and the California State University systems.

More importantly, low-cost, conveniently located community colleges are the primary gateway into post-high school job training and four-year degrees for those who would otherwise be stuck on the lower rungs of the socioeconomic ladder. Some big changes are coming to the system; some of them from Gov. Jerry Brown, who began his political career a half-century ago as a community college trustee in Los Angeles and will end it this year.

Under his prodding, the Legislature has approved a new state-operated online community college that he says will give workers displaced by technology or other circumstances new opportunities to acquire marketable skills.

“I want people to be able to open their own imaginations whether they are 15 or 50. Now (students) have a real opportunity to not only learn but to get a certificate and get skills to earn more money, advance and pursue their dreams,” Brown told the state community college board after signing legislation for the online college.

Brown and the Legislature are also overhauling how the colleges are financed, giving them more state aid but conditioning some money on how well colleges are preparing students for jobs or transfer to four-year institutions.

It’s meant to be a carrot to encourage better performances by local colleges, who previously had been given allocations based on enrollment, but it’s also something of an anomaly.

The governor has stoutly resisted performance measures for K-12 schools, even for his program of directing more state aid to help poor and “English-learner” students raise their academic skills.

He calls that reluctance “subsidiarity,” meaning trusting local education officials to do the right thing, and has rejected pleas of education reformers for more accountability.

It’s a little odd that he would reject such accountability for K-12 schools but insist on it for community colleges.

Still another Brown-backed change is called “California College Promise.” Participating community colleges may provide financial incentives and guaranteed transfers to four-year colleges for community college students meeting certain criteria. The program also envisions community colleges partnering with K-12 schools to improve college preparation.

Brown, however, is not the only source of change for the community colleges.

This month, the state community college board approved an agreement that allows students who have completed required lower-division work in some majors to transfer as juniors to private, nonprofit colleges and universities. While students have sought such transfers in the past, the new agreement provides a more direct pathway for admission.

But perhaps the biggest change coming, albeit slowly, to the state’s community colleges is allowing some of them to offer four-year “baccalaureate” degrees in some fields.

Nine community colleges awarded 135 such degrees this year under a pilot program, involving such fields as dental hygiene, mortuary science and ranch management.

The state Senate has passed a bill to extend the pilot program, but it faces stiff opposition from faculty unions and the Assembly has killed extension legislation in the past.

California has a looming shortage of college-educated workers and if the gap is to be closed, community colleges must be full partners and not merely academic stepchildren.

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Coping with College Loans

Paying them down and managing their financial impact.

Is student loan debt weighing on the economy? Probably. Total student loan debt in America is now around $1.5 trillion, having tripled since 2008. The average indebted college graduate leaves campus owing nearly $40,000, and the mean monthly student loan payment for borrowers aged 30 and younger is about $350.1,2

The latest Federal Reserve snapshot shows 44.2 million Americans dealing with lingering education loans. The housing sector feels the strain: in a recent National Association of Realtors survey, 85% of non-homeowners aged 22-35 cited education loans as their main obstacle to buying a house. Eight percent of student loan holders fail to get home loans because of their credit scores, the NAR notes; that percentage could rise because the Brookings Institution forecasts that 40% of student loan borrowers will default on their education debts by 2023.1,3

If you carry sizable education debt, how can you plan to pay it off? If you are young (or not so young), budgeting is key. Even if you get a second job, a promotion, or an inheritance, you won’t be able to erase any debt if your expenses consistently exceed your income. Smartphone apps and other online budget tools can help you live within your budget day to day or even at the point of purchase for goods and services.

After that first step, you can use a few different strategies to whittle away at college loans.

*The local economy permitting, a couple can live on one salary and use the wages of the other earner to pay off the loan balance(s).

*You could use your tax refund to attack the debt.

*You can hold off on a major purchase or two. (Yes, this is a sad effect of college debt, but it could also help you reduce it by freeing up more cash to apply to the loan.)

*You can sell something of significant value – a car or truck, a motorbike, jewelry, collectibles – and turn the cash on the debt.

Now in the big picture of your budget, you could try the “snowball method” where you focus on paying off your smallest debt first, then the next smallest, etc., on to the largest. Or, you could try the “debt ladder” tactic, where you attack the debt(s) with the highest interest rate(s) to start. That will permit you to gradually devote more and more money toward the goal of wiping out that existing student loan balance.

Even just paying more than the minimum each month on your loan will help. Making payments every two weeks rather than every month can also have a big impact.

If a lender presents you with a choice of repayment plans, weigh the one you currently use against the others; the others might be better. Signing up for automatic payments can help, too. You avoid the risk of penalty for late payment, and student loan issuers commonly reward the move by lowering the interest rate on a loan by a quarter-point.4

What if you have multiple outstanding college loans? If one of them has a variable interest rate, try addressing that one first. Why? The interest rate on it may rise with time.

Also, how about combining multiple federal student loan balances into one? That is another option. While this requires a consolidation fee, it also leaves you with one payment, perhaps at a lower interest rate than some of the old loans had. If you have multiple private-sector loans, refinancing is an option. Refinancing could lower the interest rate and trim the monthly payment. The downside is that you may end up with variable interest rates.5

Maybe your boss could help you pay down the loan. Some companies are doing just that for their workers, simply to be competitive today. According to the Society for Human Resource Management, 4% of employers offer this perk. Six percent of firms with 500-10,000 workers now provide some form of student loan repayment assistance.6

To reduce your student debt, live within your means and use your financial creativity. It may disappear faster than you think.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – studentloanhero.com/student-loan-debt-statistics/ [5/29/18]
2 – cnbc.com/2018/05/24/students-would-drop-out-of-college-to-avoid-more-debt.html [5/24/18]
3 – cnbc.com/2018/04/19/student-loan-debt-can-make-buying-a-home-almost-impossible.html [4/19/18]
4 – nerdwallet.com/blog/loans/student-loans/auto-pay-student-loans/ [2/21/17]
5 – investorplace.com/2017/06/how-to-navigate-your-student-loan-debt/ [6/6/17]
6 – shrm.org/resourcesandtools/hr-topics/benefits/pages/student-loan-assistance-benefit.aspx [6/14/17]

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College Funding Options

You can plan to meet the costs through a variety of methods.

How can you cover your child’s future college costs? Saving early (and often) may be the key for most families. Here are some college savings vehicles to consider.

529 college savings plans. Offered by states and some educational institutions, these plans let you save up to $15,000 per year for your child’s college costs without having to file an I.R.S. gift tax return. A married couple can contribute up to $30,000 per year. (An individual or couple’s annual contribution to a 529 plan cannot exceed the yearly gift tax exclusion set by the Internal Revenue Service.) You can even frontload a 529 plan with up to $75,000 in initial contributions per plan beneficiary – up to five years of gifts in one year – without triggering gift taxes.1,2

529 plans commonly feature equity investment options that you may use to try and grow your college savings. You can even participate in 529 plans offered by other states, which may be advantageous if your student wants to go to college in another part of the country. (More than 30 states offer some form of tax deduction for 529 plan contributions.)1,2

Earnings of 529 plans are exempt from federal tax and generally exempt from state tax when withdrawn, so long as they are used to pay for qualified education expenses of the plan beneficiary. If your child doesn’t want to go to college, you can change the beneficiary to another child in your family. You can even roll over distributions from a 529 plan into another 529 plan established for the same beneficiary (or another family member) without tax consequences.1

Grandparents can start a 529 plan (or other college savings vehicle) just like parents can. In fact, anyone can set up a 529 plan on behalf of anyone. You can even establish one for yourself.1

These plans now have greater flexibility. Thanks to the federal tax reforms passed in 2017, up to $10,000 of 529 plan funds per year may now be used to pay qualified K-12 tuition costs.2,3

Coverdell ESAs. Single filers with modified adjusted gross income (MAGI) of $95,000 or less and joint filers with MAGI of $190,000 or less can pour up to $2,000 annually into these accounts, which typically offer more investment options than 529 plans. (Phase-outs apply above those MAGI levels.) Money saved and invested in a Coverdell ESA can be used for college or K-12 education expenses.3

Contributions to Coverdell ESAs aren’t tax deductible, but the accounts enjoy tax-deferred growth, and withdrawals are tax free, so long as they are used for qualified education expenses. Contributions may be made until the account beneficiary turns 18. The money must be withdrawn when the beneficiary turns 30, or taxes and penalties will occur. Money from a Coverdell ESA may even be rolled over into a 529 plan.3,4

UGMA & UTMA accounts. These all-purpose savings and investment accounts are often used to save for college. They take the form of a trust. When you put money in the trust, you are making an irrevocable gift to your child. You manage the trust assets until your child reaches the age when the trust terminates (i.e., adulthood). At that point, your child can use the UGMA or UTMA funds to pay for college; however, once that age is reached, your child can also use the money to pay for anything else.5

Whole life insurance. If you have a permanent life insurance policy with cash value, you can take a loan from (or even cash out) the policy to meet college costs. Should you fail to repay the loan balance, obviously, the policy’s death benefit will be lower.6,7

Did you know that the value of a life insurance policy is not factored into a student’s financial aid calculation? If only that were true for college savings funds.6

Imagine your child graduating from college, debt free. With the right kind of college planning, that may happen. Talk to a financial professional today about these savings methods and others.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – irs.gov/newsroom/529-plans-questions-and-answers [2/20/18]
2 – cnbc.com/2017/12/29/tax-bill-529-plan-provision-helps-families-save-on-school-costs-taxes.html [12/29/17]
3 – forbes.com/sites/katiepf/2018/04/13/yes-the-coverdell-esa-still-exists-and-heres-why-you-should-care [4/13/18]
4 – irs.gov/taxtopics/tc310 [3/1/18]
5 – finaid.org/savings/ugma.phtml [5/8/18]
6 – collegemadesimple.com/whole-life-insurance-vs-529-college-savings-plans/ [5/9/18]
7 – marketwatch.com/story/a-529-roth-ira-insurance-whats-best-for-college-savings-2017-03-22 [5/13/17]