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Marlene Stum

Marlene Stum is a nationally recognized researcher in family resource management.

The road to financial security

Map a route and set your course using proven financial tools from Extension

Feb. 12, 2007

How much time did you spend planning your last family vacation? How much time did you spend watching TV this past week? How much time have you spent planning for your life after age 60? We spend more time planning annual vacations than we do retirement and later life-which can last 30 years or more. "Thanks to a lifetime of poor savings rates and fewer family members to provide care, the sheer numbers of people needing and eligible for publicly funded long-term care by 2030 could overwhelm the state budget," Larhae Knatterud, Minnesota Department of Human Services planning director, wrote in a 2005 report to the Minnesota Legislature.

Today, more than ever, it's up to each of us to plan for our financial security in later life. Since the 1980s, retirement planning has undergone a major shift. From defined benefit plans to defined contribution plans, responsibility has shifted from employers to employees. "How individuals prepare for later life has a collective impact on everyone," Knatterud said. "People who prepare now are less likely to place increasing demands on limited public resources like government sources of income, health insurance and social services."

"Individuals need to make plans for the type of later life they want and how they are going to achieve their goals," Stum said.

While employees are increasingly responsible for their own retirement planning, the statistics are not promising: 40 percent of workers are not saving for retirement, 33 percent of workers age 51 to 61 have not yet begun to think about retirement, and one in five Minnesotans ages 40 to 69 are projected to have insufficient resources for basic living and long-term care. In 2003, the Minnesota Legislature asked the state Department of Human Services (DHS) to study long-term care financing options. DHS staff turned to Extension's Marlene Stum, Family Social Science professor, for her nationally recognized research in family resource management. Stum studies what factors motivate individuals to take personal responsibility and prepare financially for their retirement and old age. "Knowing how individuals make these decisions is crucial to developing successful policies and strategies," Knatterud said. Motivating individuals to plan and prepare for financial security in later life is a daunting challenge. How often have you been reminded about retirement planning, long-term care insurance or health directives and not taken action? You are not alone. Stum's research on the gap between people's intentions and their actual behavior revealed several factors that widen the gap-perceptions or feelings about the problem and solutions, decision-making styles, knowledge, and prior experience. Using this information, Stum led a team of Extension researchers and educators who have developed workshops and self-study materials on financial security in later life. "Individuals need to make plans for the type of later life they want and how they are going to achieve their goals," Stum said. "We learned that the work site is a very positive place to offer education and tools to help in the planning. People trust their employers to offer good products and it's convenient-two important factors for taking action." For more information, see worksite education and financial security.

From Source, winter 2007, a publication from University of Minnesota Extension.