Powering Your Retirement Radio

Here is a breakdown of the 10 themes and a link to the full report

10 investment themes for 2022

1 Pricing power

2 Tech trifecta

3 Dividend comeback

4 Health care innovation

5 Transportation transformation

6 China challenges and opportunities

7 Media disruption

8 Future of financials

9 ESG everywhere

10 Flexible fixed income

* Volatility Perspective

 

To see the full report from Capital Group, visit their site HERE.

Everyone has questions, a common one is when to claim Social Security? Last week I had an individual in asking that very question. I think this person was like many people I talk to, they wanted a definitive answer, not a word problem from the SAT test. Sadly, there isn’t a single right answer.

If you want to blow your mind, you can claim Social Security in any one of the 96 months from your 62nd to 70th Birthday, if you are married your spouse has the same 96 months, so there are 192 decision points assuming one spouse has a higher earnings history there is the possibility of collecting a Spousal Benefit. Spousal Benefits stop at your full retirement age, which adds another 60 decision points. So that is 252 different options to consider? Are your eyes glazing over yet?

I find Social Security claiming to be an emotional decision, not a financial decision. There is no one size fits all answer to when to claim Social Security, because of the amount of unknowns in the calculation. When you start factoring in life expectancy to the 252 decisions point it is enough to drive you mad. I always ask what is the goal for the money from Social Security? Biggest pile of money possible over your lifetime, or reclaiming your life as soon as possible.
Back to my clients, he started with I should take at 62, right? I started to explain how delaying could lead to more money over their lifetime. The conversation took an immediate 180-degree turn. “Okay, then I’ll wait until age 70,” was his reply. I asked how he planned to bridge the income gap not claiming Social Security would cause? Another 180-degree turn, “okay then I should take it at 62?” Round and round they went until we created a spreadsheet showing the cumulative dollars they would receive over the years. It was helpful, but it still doesn’t help due to the unknown of life expectancy.

Here is an example of what the decision looks like, I am using a real set of Social Security numbers, which at age 62 would pay $1,896, at age 67 would pay $2,693, and at age 70 would pay $3,340.

Let’s look at some numbers, at age 62, you would receive $22,752 a year which would add up to $113,760 before the 1st payment of the Full Retirement Age (67) stream and $182,016 if you waited until age 70. Over 30 years the total income (not adjusted for COLA) would be worth $682,560.
At age 67, you are starting behind, but you’d have a larger payment of $2, 693 and $32,316 a year. At the end of 12 years (age 78), the stream of income from age 67 to age 79 would have caught up and be ahead of the age 62 stream by $1,008. Each month from here on out the gap would grow. At the end of the 30-year period base on starting at age 62. The 67 to 92 stream would be worth $807,900. That is $125,340 more, but you have to be alive to collect it.

Finally, if you were patient and waited until age 70 your starting payment would be $3,340 a month and $40,080 a year. The 70-year-old stream start behind the 62-year-old stream by $182,016. The 67-year-old stream has a lead of $96,948. The large payment catches up to the 62 -year-old stream in the 11th year and it catches the 67-year-old stream in the 13th year. The gap continues to grow from then on. The biggest pile of money if you live to 84 years old is going to be waiting until age 70. This stream of income at the end of the age 62 30-year timeframe would be worth $881,760, which is $199,200 and $73,860 more for age 62 and 67 respectively.

The conclusion is you have to make an educated guess on your health, longevity, and vitality. Knowing one’s a to have the desire and ability and not be able to do things and likewise having the money, but not the ability to enjoy are the two least desired outcomes.

What it boils down to is if you don’t think for whatever reason you will live into your 80s, claiming early can make sense. If everyone in your family lives until their 90s waiting will lead to more money. The follow-up question is are you willing to trade the extra time waiting, for the higher payout. If you can go without the income and still be retired, it is probably okay to wait. If you are spending down assets in the hope of getting more money from Social Security, you need to dig a little deep to make sure you are making the right choice for you and your family.

In my experience most people take Social Security, based around when their total income including Social Security reaches their desired level, not based on what leads to the biggest pile of money, but what lets people reclaim their life as early as possible. The CFP© in me thinks people should wait, the reality and the human being part likes to see people reclaim control of their life. Hopefully, after some planning, you can make a decision that is right for you. 

If you could choose between $1,000,000 today or a penny that would double every day which, would you choose? As you might guess the Magic Penny is a better deal.

So, what does that have to do with your 401(k)? It is an example of compound interest. Little things you do early in your working career have a big impact on your savings when you are ready to retire. I ran an example of someone who started saving at the age of 25 through age 65. If they invest $10,000 each year and get a 6% return over the 40 years you would have a portfolio valued at $1,547,619.66. That would be from a total investment of $400,000.00 over the 40 years.

If you look at what each decade of investing would be worth it is clear the earlier you start the better off you would be. Each decade you would invest $100,000.00 every 10 years. After 40 years the money you saved between 25 and 34 would be worth $757,037.79 which equals 48.9% of your account. The money saved from 35 to 44 would be worth $422,725.95 which equals 27.3% of your account. The money saved from 45 to 54 would be worth $236,047.96 which equals 15.3% of your account. The money saved from 55 to 64 would be worth $131,807.95 which equals 8.5% of your account.

Never underestimate the value of time and consistency. I’d never tell you to not try to save more or take advantage of the Catch Options, but as you can see in the tables below if you get to keep doing the right thing the magic of compounding will do it thing.

 

The Magic Penny

Days

Value

1

$0.01

2

$0.02

3

$0.04

4

$0.08

5

$0.16

6

$0.32

7

$0.64

8

$1.28

9

$2.56

10

$5.12

11

$10.24

12

$20.48

13

$40.96

14

$81.92

15

$163.84

16

$327.68

17

$655.36

18

$1,310.72

19

$2,621.44

20

$5,242.88

21

$10,485.76

22

$20,971.52

23

$41,493.04

24

$83,886.08

25

$167,772.16

26

$335,544.32

27

$671,088.64

28

$1,342,177.28

29

$2,684,354.56

30

$5,368,709.12

Growth of $10,000 at 6% over 40 years

Years to go / invested

Deposit

Value of Deposit after 6% return

Years to go / invested

Deposit

Value of Deposit after 6% return

40 / 1

$10,000.00

$10,000.00

20 / 21

$10,000.00

$32,071.35

39 / 2

$10,000.00

$10,600.00

19 / 22

$10,000.00

$33,995.64

38 / 3

$10,000.00

$11,236.00

18 / 23

$10,000.00

$36,035.37

37 / 4

$10,000.00

$11,910.16

17 / 24

$10,000.00

$38,197.50

36 / 5

$10,000.00

$12,624.77

16 / 25

$10,000.00

$40,489.35

35 / 6

$10,000.00

$13,382.26

15 / 26

$10,000.00

$42,918.71

34 / 7

$10,000.00

$14,185.19

14 / 27

$10,000.00

$45,493.83

33 / 8

$10,000.00

$15,036.30

13 / 28

$10,000.00

$48,223.46

32 / 9

$10,000.00

$15,938.48

12 / 29

$10,000.00

$51,116.87

31 / 10

$10,000.00

$16,894.79

11 / 30

$10,000.00

$54,183.88

30 / 11

$10,000.00

$17,908.48

10 / 31

$10,000.00

$57,434.91

29 / 12

$10,000.00

$18,982.99

9 / 32

$10,000.00

$60,881.01

28 / 13

$10,000.00

$20,121.96

8 / 33

$10,000.00

$64,533.87

27 / 14

$10,000.00

$21,329.28

7 / 34

$10,000.00

$68,405.90

26 / 15

$10,000.00

$22,609.04

6 / 35

$10,000.00

$72,510.25

25 / 16

$10,000.00

$23,965.58

5 / 36

$10,000.00

$76,860.87

24 / 17

$10,000.00

$25,403.52

4 / 37

$10,000.00

$81,472.52

23 / 18

$10,000.00

$26,927.73

3 / 38

$10,000.00

$86,360.87

22 / 19

$10,000.00

$28,543.39

2 / 39

$10,000.00

$91,542.52

21 / 20

$10,000.00

$30,256.00

1 / 40

$10,000.00

$97,035.07

 

Year Invested

Welcome back to Powering Your Retirement Radio. I am Dan Leonard your host. You can take a few steps to set yourself up for 401k success.

You can take these steps to maximize your 401(k) regardless of your age. 

Steps:

1. Enroll! Stop procrastinating - the sooner you start, the bigger your balance will be later.

1. Contributions
   1. Start with any amount, just start
   2. Annual Automatic Increase - most plans allow you to automatically increase your contribution rate annually. Time it to when you get your annual pay raise. For my PG&E clients, that would be on your March check.
   3. Shoot for 10% or 15%
   4. Don’t overdo it when you are younger - under 35-year-olds usually have competing goals like getting married, having kids, and buying a home. Target maxing out your match.
   5. Prioritize savings once life goals are achieved
   6. Take advantage of the Catch-Up Contribution amounts at age 50.

1. Matching - Try to contribute enough to maximize company matching.

1. Spillover - If you can afford to contribute more and the plan allows for excess contributions.

1. Mega-back Door Roth - In 2021, you could have contributed $58,000 plus the 6,500 Catch-Up contributions (for those 50 and older). The $58,000 includes your elective deferral, company matching, plan allocations of forfeitures, and after-tax employee contributions (spillover).

1. Higher Wage Earners - take advantage of when you hit the wage base for Social Security of $147,000(2022) and the 6.2% Social Security tax stops being deducted. Increase your contribution rate for the rest of the year.

1. Other:
   1. Start early and be consistent.
   2. Use the Catch-Up contribution when you reach 50.
   3. You control how much you save and how long.

Until the next Episode, stay safe!

For more information visit the podcasts website: https://poweringyourretirementradio.com/set-yourself-up-for-401k-success/

Welcome back to Powering Your Retirement Radio. I am Dan Leonard your host. In the last episode on Top 10 Tax Facts, you should know, I got a fair amount of downloads and got more comments than normal. In this episode, I thought I address how to read your tax return.

As a financial advisor, I get asked, Why do you need to see my tax return? When I ask for documents.

As a tax preparer, I get a different question, did I give you everything? The answer to this is how should I know? Did you fill out the tax organizer completely? Which is usually followed up with I have to? Yes, if you want me to know for sure.

Before you turn in your documents to your tax preparer, pull out your prior year’s return. It will tell you if you have forgotten anything.

I need to make a confession, prior to becoming an Enrolled Agent and starting to prepare returns for clients, I was a horrible tax client. I didn’t fill out organizers, I never was sure I had all my documents. So, this episode reminds me of how I have learned to organize tax documents.

I want to walk you through your 1040 form which will tell you what documents you should have. 

If you want extra credit print out Form 1040 and take some notes.

How to read a tax return

On the top half of page one, you have the following

• Filing Status

• Address

• Crypto Question - This is important.

• Standard Deduction

• Dependants 

All are straightforward. As Preparer, I need to know about your relationship status, where you reside, if you own any cryptocurrency, if there are any issues with your deductions, and if you have dependents. As a financial advisor, I know how many people I am planning for, that you are potentially an aggressive investor if you have a mortgage if you have kids, or dependents to include in the planning. Either way, I know a fair bit without even seeing a form.

The income numbers

Let’s look at the bottom half of page 1. 

Line 1 - W-2 go here - You have a job and you are an employee

Line 2 - 1099-Int or a Consolidated 1099 - You have savings that are earning interest = Sch B

Line 3 - 1099-Div or a Consolidated 1099 - You own investments that pay dividends = Sch B

Line 4 - 1099-R - You rolled over a retirement account or you took a distribution from a retirement account or it goes on Line 5

Line 5 - 1099-R - You collect on a pension or an Annuity

Line 6 - SSA-1099 - You are collecting Social Security

Line 7 - You sold an investment or a property. The Capital Gain is reported on a 1099-B or 1099-S or a Consolidated 1099

Line 8 - This is other income. See Part I of Schedule 1 - State Refunds (1099-G), Jury Duty, Alimony, Unemployment, and since the Olympics are going on your Olympic, ParaOlympic Medals, and USOC prize money, too.

Line 9 - Phew - it is just math

Deductions

Line 10 - Now Adjustments to income - Part II of Schedule 1 - Educator Expense, Self Employed Health Care Expense, Self Employment Tax, Student Loan Interest, IRA Deductions, and of course the nontaxable amounts of your Olympic, ParaOlympic Medals, and USOC prize money.

Line 11 - More Math

Line 12a - Schedule A Deductions or Standard Deduction

Line 12b - If you claim a Standard Deduction you can claim up to $300 in Charitable Deductions

Line 12c - Math

Line 13 - Qualified Business Deductions (QBI) for Business Owners

Line 14 - Math, again.

Taxable Income

Line 15 - Math and this is your Taxable Income

On to page 2

Line 16 - Tax Calculation, the painful math

Adjustments

Line 17 - Come from Part I of Schedule 2. Alternative Minimum Tax and Excess Advance Premium Tax Credit

Line 18 - Math

Line 19 - Nonrefundable Child Tax Credit

Line 20 - Schedule 3 - Credits and Payments. Dependent Care Credits, Residential Energy Credits, Adoption credits, etc.

Line 21 and Line 22 - More Math

Line 23 - More Taxes, like additional taxes on HSA distributions, accumulated distributions from Trust, Golden Parachute payments. (Not as common for many)

Line 24 - More Painful Math - Your Total Tax

Taxes you have paid already

Line 25a - W-2 Withholdings

Line 25b - 1099 Withholdings

Line 25c - Any other form showing withholdings

Line 25d - Totals

Line 26 - Total of your Estimated Tax Payments 

Line 27a - Earned Income Tax Credit

Line 27b - Noncombat Taxable Pay Election

Line 27c - 2019 Income which may qualify and expand credit due to Coronavirus

Line 28 - Refundable portion of Child Tax Credit or Additional Child Tax Credit

Line 29 - Form 8863 - American Opportunity Tax Credit

Line 30 - Recovery Rebate Credits (Stimulus Checks)

Line 31 - Part II of Schedule 3 - Extension Payments, Excess Social Security, Health Care Tax Credits

Line 32 - Math

Line 33 - Math - Your Total Payments

Refund or Tax Due

Line 34 - The happy line, which is the amount of your refund if you are getting one

Line 35 - What do you want to be refunded

Line 36 - What do you want to pay toward next years taxes

Line 37 - The unhappy line, What you owe.

Line 38 - The insult line, any penalties for underpayment

At the bottom of page 2

3rd Party Designee, who you’ll allow to talk to the IRS on your behalf.

Signatures, sign your return

Paid Preparer, if you paid someone to make sure their information is there, otherwise don’t pay them.

So as a preparer, if I have your return from last year, I can tell what you had on your return based on what lines are filled in. Without the schedules, I may not know everything, but I know where I need to ask more questions.

Recap

As a Financial Planner, with Lines 1 to 8, I have a pretty good idea if you have investment assets or are dra

Welcome back to Powering Your Retirement Radio. This week I am taking off my Investment Advisor, Certified Financial Planner™ hat, and putting on my Enrolled Agent, Marathon Tax Planning hat. I am going to share 10 Tax Facts for 2022.

I recently attended a two-day, 16 hours of continuing education tax update session for my tax practice. To say it was fun would be a lie; informative and had lots of good information, without a doubt.

Western CPE was the firm offering the classes. The instructors Sharon Kreider, CPA, Karen Brosi, CFP®, EA, and Mark Seid, EA, CP, USTCP, are some of the smart people I know in the tax world. They all also are practicing preparers in addition to instructors.

It is impossible to recap the 16 hours in one podcast so I thought I would pull out a Top Ten List of things many people would or should want to know about.

Top 10 Tax Facts

1) IRS overwhelmed by calls – 90,000 calls a minute

2) IRS Enforcement is back – Letter usually asks for a reply in 30 days. It takes them 60 days to sort their mail.

3) 3rd Round of Stimulus in March of 2022 – Reporting this correctly, IRS not making adjusts for taxpayers this year

4) Child Tax Credit was increased in 2022, but there is a Double Phase Out to help confuse matters. The advances will be reported on IRS Letter 6149. The CTC Advance will cause problems for divorced parents who swap child deductions yearly.

5) Child and Depend Care Credit was increased. The new total does not have to be spent evenly if you have more than one child.

6) Medical Expense Deductions on Schedule A were permanently lowered to 7.5% of AGI. PPE qualifies for Medical Expenses, and yes, hand sanitizer counts.

7) Student Loan Tax-Free Forgiveness extended through 2025

8) Virtual Currency is receiving increased scrutiny. If you exchanged currency from one coin to another, that is reportable. That is a taxable event if you receive currency without paying for it.

9) Have you moved? Update your address with the IRA on Form 8822 or Form 8822-B for a business

10) Set up an account on IRS.gov. It will establish an ID.me

*Bonus*

FBAR and FATCA, don’t forget to file if you have accounts outside the US.

Please listen to the episode to hear more about each topic, or click on the links in this post to read more about the different topics.

Thank you for listening. I will talk with you again soon. Until next time stay safe.

For more information, please visit the podcast's website: https://poweringyourretirement.com/2022/01/20/top-10-tax-facts-you-should-know-for-2022

Hello, welcome back to Powering Your Retirement Radio. I'm your host, Dan Leonard. And this week, we'll look at 7 items to review to make sure you're starting the year off strong financially and on track for a great year.

1. 401k contributions

Determine how much money you want to save for the year. The actual dollar amount. Divide that amount by your annual salary, or salary plus bonus, if bonuses are included(They are not at PG&E, base salary only). The answer is the percentage you need to save to reach your goal.

2. Tax Withholdings

Determine what your annual income will be. The most common way is to multiply your first paycheck of the year by however many checks you will receive for the year(4, 12, 24, 26, and 52 are the standard options). If married, add your spouse's income to your own. Pull up your Federal and State (CA) Tax Tables, reduce your taxable income by deductions, and calculate your tax liability. Divide the tax liability by the number of paychecks, and compare that number to what was withheld on your check. This is not foolproof but should give you an idea if you are on track. If you still have questions, you can ask me questions.

3. Beneficiaries & Estate Plan

Check your beneficiaries on all your accounts and in your will and trust documents. If you, a parent or a loved one, had a baby, passed away, got married, or got divorced, you may have some updating to do.

4. Subscription Billing

Everyone gets an automatic renewal from time to time. It is hard to track every payment in today's digital age. Pull three months' worth of receipts and see what you can do without. Or use a service like Privacy.com that lets you control what can be charged.

5. Paying Down Debt

Paying down debt can be difficult. There are many ways to do that, but Dave Ramsey has a pretty straightforward way. Watch this short video to hear it from Dave himself.

6. QCDs (Qualified Charitable Distributions)

If you are 70.5 years old and giving to charity, you must learn about Qualified Charitable Distributions.

7. Review Your Social Security Statement

Go to SSA.gov and download your statement. Review how much you are on track for.

Have a great start to your year. I look forward to helping you over the year understand financial concepts and ideas that will help you prepare for retirement the right way.

For more information, you can visit the podcast website HERE.

Hello, and welcome back to Powering Your Retirement Radio. I'm Dan Leonard, your host. This week I'm gonna go back to square one. After doing some consulting with some other podcasters and their podcasts, they said looking through your catalog of episodes; you don't really see anything on you. Everyone had some kind of an about me type of episode. I figured here on New Year's Eve; you'll probably be sitting there watching the ball drop, listening to this, and just having a grand old time. Happy New Year, have a great evening. And, if you listen to the whole episode, God bless you.

Background

We'll just start with some basic background facts. I've been in the industry for over 30 years. My first job in the financial service industry was back in 1988 while I was still in college. I had a chance to work for Merrill Lynch on the floor of the American Stock Exchange, which was exciting and meaningful for me since both my grandfather and great-grandfather were members of the American Stock Exchange. So that was a great thrill to get to walk in their footsteps.

Since graduating college, I've worked as a financial advisor in New York, Canada, and California; I've had the opportunity to live in five states in two countries. In addition to being an advisor, I've also worked in the financial services industry in the mutual fund and annuity area as what they call a wholesaler, which is the representative for the individual products. If you think of mutual funds like Franklin, Fidelity, or American, they all have sales forces. Their sole job is to market to financial advisors to raise brand awareness, and like anything else, the things that get on the end caps at a grocery store or Home Depot don't get there magically.

There are product representatives that are in there talking to the store manager. You get this on the end of your aisle, and you'll sell more, and your store revenue will be up. Wholesalers use the same concept, except we were fighting for the mental headspace of financial advisors. And even to this day, this still persists. A lot more of that is done virtually these days. But the funds that I put in client portfolios and the representatives I know make sure we know everything going on.

I personally use an outside third party to help me build those models. So I get support from the reps after selling the product. They're not proactively promoting their product to me, they're doing it more in a support role, but there are different ways that different people run their businesses. So I've been both retail, meaning client-facing, and then wholesale, institution-facing in my career. On the institutional side, you know, I've done presentations to literally hundreds of brokers at one time in conference format, down to individual meetings with clients and advisors. At the same time, I've also been an instructor where we would go into offices and offer continuing education. I've lived it. I've worked. I've been in every facet of the financial industry, as far as providing advice, whether it be coaching people, giving advice, or dealing with the end-user in the client space.

During that time, I've actually had the opportunity to work in 20 different states. I've met with thousands of advisors. I've been in hundreds of brokerage offices, primarily in my career, early on when I was doing what I was working in, what is called the wirehouse environment, which would be the Merrill Lynch Smith, Barney, formerly PaineWebber, those typed up of firms on a national level.

When I was in the mutual fund industry, I worked with over 20 different actual portfolio managers, running individual mutual funds. I've gotten to see how several different managers run their businesses. Probably the two biggest names would be Louis Navieller out of Reno. He was a manager for one of the companies I worked for in the late nineties and then Charles Brandis in La Jolla, which makes international investments and value investing. I've had chances to work with those people individually when they'd be out to travel. On a roadshow, we would go to offices to talk about their investing style. It's been a fun career because there are opportunities where I'm sitting down with clients like I do today, helping 'em with their personal financial situation. And then on the other end, being at a big conference where you're presenting to hundreds of advisors, and you've got one of the top money managers that just got off of a call with CNN driving around with you in your car, talking about the markets with you.

Concepts and Principles

Disciplined Process

Focused Approach

Make it Understandable

Limit Decisions

3 H's

Be Humble

Be Human

Be Honest

Why you?

Come for Performance

Stay for Service

Lost Trust or Ignored

What is important

The number one rule, I think all people have to keep in mind when it comes to investing, is that investments are important. The money is important because that's what you're gonna live on. But ultimately, it's your family. It's your health and your happiness. Your well-being is the most important part of it. So if you're in a relationship with an advisor that's suffering because you're concerned about stuff, and things aren't working, that's the reason to consider looking for a new advisor. And that goes if you're one of my clients or looking to be one of my clients. If you're in a relationship where you never hear from your advisor, and you don't feel like you can get answers from them, then you need to look for a new advisor.

So that's where I try to make sure there's lots of outbound communication from me to who my clients are now, not all clients are gonna engage in it all, but that's on their end. I'm making sure that they know what we do and why we're doing it. So that's a little bit about me, my background, some of my philosophies, and thoughts on the market, hopefully, that was useful. 

I just want to wish everybody a happy new year. And I look forward to talking with you in 2022. Thanks so much. Stay safe until next time.

For more information please visit the Podcast Webpage.

https://poweringyourretirement.com/2021/12/31/background-and-principles/

In this episode, I will walk you through a year-end checklist. There are checklists everywhere in the financial press and on social media of things you should do to lower taxes, lose weight, save money, and do anything else people want.

Most people take a quick look and say to themselves; I know that, or I have that covered. Thankfully, many people do, but unfortunately, many also don't. So I will walk through such a checklist and give you some insight into why these lists don't ever seem to change. Still, you hear the horror stories of a widowed second spouse that doesn't get their spouse's retirement plan because, inexplicably, the spouse never updates a beneficiary agreement to reflect that they divorced and remarried.

Or the person whose parents passed away and never took their Required Minimum Distribution (RMD), the child inherits the account and gets a letter from the IRS demanding payment of the penalties for not taking the RMD. The penalty is 50% of the amount not taken.

Finally, the person who gets a surprise at tax time because they never set up withholdings on Social Security or IRA distributions when they retired receives a nasty surprise.

These examples may all sound a bit ridiculous, but I assure you every year, I come across someone that had a problem that a simple review could have helped them avoid. So, I implore you to talk to your financial advisor or tax professional to discuss what has changed over the last year or even what you know will change in the coming year and avoid a surprise.

When do you want to know about it if you have a problem? My guess is as soon as possible.

For more information, visit the podcasts website: https://poweringyourretirement.com/2021/12/17/year-end-checklists-2

Welcome back to Powering Your Retirement Radio. Today, we're going to continue our conversation about college planning and colleges in general with my good friend, Dr. Bryon L. Grigsby, who I've known since we were high school classmates, college roommates, and many other things throughout our lives. Bryon is the President of Moravian University in Bethlehem, Pennsylvania, and he is one of the few presidents is also the President of his own Alma Mater. Moravian was founded in 1742. It's the sixth-oldest school in the country. It was the first to educate women. And it's been thriving since Bryon became the President back in the summer of 2013. So with that, welcome back, President Grigsby. Why don't you tell people that maybe didn't hear our last episode, just a bit of yourself and Moravian?

Start of Interview

President Bryon L. Grigsby:

It's great to be here. Dan is a treat to run our Alma Mater, and I'm not quite sure when we were tearing around the campus. Either one of us thought that we'd be in the roles we're in right now, but it's a joy to be at your Alma Mater. It is the sixth oldest college in the nation. It's in Bethlehem, Pennsylvania. We have one of the only Revolutionary War hospitals on the campus, and we're about to get UNESCO world heritage designation, which will be the second a university in the nation to be a world heritage site, the University of Virginia being the other one. So it is a place of very historic buildings. My house, the President's house, comes with a desk that was George Washington's. And so you are when you're wandering around the streets of Bethlehem, truly wandering around in the footsteps of Benjamin Franklin, George Washington, and Lafayette. So it's a neat place to be. The campus is a Division III sports campus. We have about 2,600 students on the campus. We have about 25% of our students are graduate students and primarily in the healthcare and business industries. The other 75% are undergraduate students and all sorts of liberal arts and science and nursing.

 

Main Points Covered

Four Year School vs. Community College

• Risk vs. Reward

Value of a Liberal Arts Education

• Training people for jobs that don't exist, yet

What does success look like in college?

• Relationships with Faculty and classmates and taught by professors, not grad assistants

 

Dan:

As an aside for the listeners, I've got to tell you the story of the George Washington desk. I was back at Moravian for Bryon's inauguration, and I heard the story about George Washington's desk. Later we were back at the President's house for a reception. And I asked him, where is this George Washington's desk? And Bryon looked me square in the eye and said, you're leaning on it, which I promptly got off of and wondered why there wasn't a velvet rope around it. The things you learn after you graduate from college. Anyways, one of the things that is an issue here in California, and we talked about it a little bit in the last episode about affordability, is kids that aren't quite ready for a four-year school. Here the answer is DVC - Diablo Valley College. It's the community college much like North Hampton in Pennsylvania or Orange County Community College, where we grew up, and that's in New York, not California for all my California listeners. Should I go to a four-year school and figure out if I like it or not, or should I do two years in community college? Let's start with that.

President Bryon L. Grigsby:

The lowest level of risk financially is to go to a community college. If your child doesn't know academically, what they want to do, and financially you're having difficulty affording college education, community college is a very viable opportunity. If a student is not successful at community college, they'll have maybe a couple of thousand dollars worth of student loans. As opposed to, if they're not successful at a state university or even an independent college, you could have $10,000 or more in student loans and no degree to be able to help pay down those loans. If you look at when people talk about the student loan crisis, everybody's eligible by the federal government. When you do a FASFA to get a loan from the federal government, it's guaranteed from the federal government. You don't have to put up any collateral for it, but paying that loan back without a college degree can be nearly impossible.

 

If you look at the default rates of all the student loans, they're all in $10,000 and less that's because a person who has $150,000 probably is going to med school and will be able to pay that loan back after they graduate. But the person who has $8,000 and did not get a college degree of any kind associates or bachelors can't afford to pay back that loan. And so that's where all the defaults come in. So if you are financially at risk and academically at-risk, community college is a great opportunity. It is an ability to very, cost-effectively see if you can make it in college courses where the downside comes in is if you academically know that you can make it in college, you're confident that your academic, your college material going to a community college may set you back in your degree, completion in programs such as nursing and engineering and computer science, because, the four-year schools have programs where you're going to get basic level information for your major in your first two years.

 

So that's the only risk you have is that if you have a career path that you really want to do in health professions, in computers and technology or an education, and, you know, you can make it, your college material you'll do fine in college. Then the best avenue is to go into a four-year school so that you can graduate within four years. If you are wondering whether college is right for you or having significant issues about paying for college, then community college, that gives you the ideal situation. And, students transfer from North Hampton here. They become highly engaged in our campus as a transfer in for the last two years. Sometimes if they're in nursing or computer science, they may have to take an extra semester to complete out that degree. But even at that level, it's still financially better for them if they're having difficulty paying for the finances.

Dan:

Obviously, Moravian's a liberal arts college. And we had talked about it a little bit before we got started today.  I thought it was an interesting comment. In liberal arts school, you're training people for jobs that don't exist. Talk to me a little bit about the value of liberal arts versus going in with like, just I'm going to be an engineer, and this is all I'm going to do.

President Bryon L. Grigsby:

Well, Moravian's proud of saying that it intentionally combines the liberal arts with professional programs. So, in my experience, I find two kinds of students have Moravian. I find the student who has known since they were eight years old exactly what they want to do. So I want to be a doctor. I want to be a veterinarian. I want to be a lawyer. I want to be a nurse. I want to be an occupational therapist. And those students come in, and they have a path. They know what that path is. They want to go. They want to go straight through that path to get their degree. Where the liberal arts benefit them is liberal arts are what we call the soft skills. So I want at the end of a college career, I want a student to be able to critically think, to work well as a team member, to be a leader, to be ethical, to be able to use quantitative, qualitative analysis, to arrive at a decision, to understand and use technology effectively in their disciplines and their majors, and to be a global citizen that understands the value of diversity.

Those are the components of a liberal arts college. Those components are transferable across every career possible. So, I may want to be a veterinarian, or I may want to be a medical doctor. And after four or five years of doing that, I decide I want to move into finance. And I do a career change because you have all these liberal arts skills. You can make that switch into a different career. Statistics will tell us that children today who are going into college will have four to five different careers over their lifetime. So, the value of the liberal arts college, even if to the student who knows exactly what they want to do right now, most likely across their lifetime, they will switch careers and need to rely on those liberal arts skills so that they can manage moving into careers back in the day when you and I went to school, everybody wanted to be a web page designer.

The internet was just starting, and all these tech schools created eight-month web page designers. Well, someone eventually created a software program that was easier just to do the software program than hire the guy for $60,000 to do your webpage. And they all lost their jobs because they didn't have all those other soft skills. So that's one kind of student that knows exactly what they want to do and the benefits of still getting a liberal arts degree, even in their professional programs, so that they can switch careers seamlessly for the student who comes into Moravian. And I would say, this was me who doesn't know what they want to do. The liberal arts provide a sampling of a variety of different careers that are possible. I had five different majors at Moravian. I went from a physics major to a math major, to a computer science major, to a criminal justice major, to