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Vanguard strategist on saving for retirement and spending when you get there

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Vanguard strategist on saving for retirement and spending when you get there

Beach bonfires, sunrise sound-bath meditation, and yoga sessions mixed with high-level financial discussions on everything from bitcoin to bonds: That’s the Future Proof Festival, which took place last month in Huntington Beach, Calif.

More than 4,000 wealth advisers and vendors from across the country came to talk about investment strategies, learn about buzzy fintech, and scarf down tacos and ice cream while singing along with Third Eye Blind and the X Ambassadors.

One afternoon I popped into the Vanguard Investments tent to sit down with Colleen Jaconetti, a senior investment strategist for Retirement Solutions at Vanguard. Jaconetti’s focus for the past two decades has been financial planning and digging into the balance between spending on immediate needs and saving for the future.

Here’s what Jaconetti had to say, edited for length and clarity:

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Kerry Hannon: You’re known for your behavioral coaching. What is a key driver to saving for retirement?

Colleen Jaconetti: The most important thing is recognizing that if you want to have enough to live on in retirement, you have to start saving early and have a portfolio with low costs.

For a lot of the young people, it’s hard to take money out of their current paycheck for retirement. They’re focused on paying their bills right now. The discipline and the understanding that foregoing something in your early years can pay huge dividends is hard to get your hands around. That discipline helps you hold steady when markets get shaky, which is a key to long-term investment success.

Some of it is just people’s personality. I have one nephew who likes to spend his money as soon as it’s in his hands. It’s his natural inclination. He’s very generous. I’m not criticizing people who spend more. They want to enjoy their life. But it’s harder to get someone like that to understand the value of savings.

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Then the second part is education. While you really want to spend now, if you understand that if you save it now that means you can maybe retire three years earlier. That makes it a more tangible thing for younger people.

It helps to understand the trade-offs of small sacrifices. You need to see where in your budget you can consider trimming.

Read more: Retirement planning: A step-by-step guide

What advice would you give a young person just starting to save for retirement?

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Set enough aside in your employer-provided retirement plan to at least get the employer match. Many employers contribute anywhere from 50 cents to $1 for every $1 an employee contributes, up to 3% or 4% of their salary. Ideally, workers should aim to save 15% of their pre-tax income each year, including any match. Giving up the employer match would be a huge disservice to yourself.

Did you have an issue with saving when you were starting out?

No, but I remember exactly how much I made every other week when I started as a senior auditor at Ernst & Young in 1994. I was paying for my apartment and insurance all for the first time, and I was like, wait, where is my money going?

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Once you are aware of where all your money goes, you realize that a little bit over here in retirement savings actually will make a huge difference later.

Vanguard has been at the forefront of the movement to help people roll over their 401 (k) savings to an IRA and not cash out when they change jobs — a mistake I made as a 30-year-old. Can you elaborate on that issue?

People say, ‘oh, it’s not that much money, so it’s okay if I just take the cash now because I want to buy a house.’ But you can’t put that money back, and you’re giving up that tax-deferred investment and the compounding for two decades or more, and that’s a lot. When you show people what it would be worth in the future, they usually say, ‘oh wow, I didn’t realize that that amount today would accumulate to be so much down the road.’

If you’re not in retirement yet, but you’re edging up to it, what should you be doing?

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This is the time to put together the big picture of what you want to do, and then how much do you need, and what’s the best way to minimize taxes.

The biggest thing is what do you envision doing in retirement? Some people want to be gardening and reading books, and some people are going to be taking two or three trips a year.

It’s figuring out how much do you need to retire and live the life that you want to live. How much Social Security will you get? Can you afford to delay receiving your benefit? Then you need to consider whether you should spend from your taxable or tax-free accounts.

colleen

Colleen Jaconetti, a senior investment strategist for Retirement Solutions at Vanguard. (Photo courtesy of Vanguard) (Vanguard)

Let’s talk about the angst people have about spending in retirement.

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A lot of people get to retirement with a number in mind. I need a million dollars to retire. Whatever it is, they decide to have a number.

Then when they have that, they don’t want to spend from their principal in retirement. So they’re going into retirement with a broadly diversified, low-cost portfolio. They’re all set and then when they look at current yields, all of a sudden, they don’t want to spend their principal.

So they overweight their portfolio in dividend-paying stocks and high-yield bonds to get the income that they desire. But what they don’t realize is that you could actually be putting the principal value at risk more than if you just spend from it.

When you think about spending in retirement, don’t be so narrowly focused on preserving principal that you forgo diversification.

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Have a question about retirement? Personal finances? Anything career-related? Click here to drop Kerry Hannon a note.

What’s a spending solution that can ease people’s concerns about running out of money?

Dynamic spending. It’s responsive to annual market performance but the year-over-year spending amount is kept within a set range to provide a level of stability.

For many retirees, our dynamic strategy offers the best of both worlds. It’s responsive to market changes without causing significant fluctuations in annual spending.

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This strategy allows them to set controlled maximum (ceiling) and minimum (floor) spending limits. Retirees can spend more when markets perform well or cut spending when they don’t — within limits.

Say a retiree starts with $1 million in a 60% US stocks, 40% US bonds portfolio. You’d start with $40,000 a year in income with a 4% initial withdrawal rate as the basis for comparison and an expected 30-year retirement.

Dynamic spending allows retirees to receive more, say 5%, or $42,000 in income. In practical terms, this could translate to enjoying a higher quality of life, however they define it: more travel, greater ability to donate, or perhaps having greater means to help family members financially.

If there’s a period of prolonged underperformance — especially early in retirement — year-over-year real spending could decline each year. In other words, real spending could drop to $39,000 in year one, $38,200 in year two … down to say $35,000 in year five.

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Having the flexibility to make small spending decreases in down markets, and the desire to spend more in a positive market is a compelling strategy for many retirees.

Take a short survey and get matched with a vetted financial adviser.

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Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist, and the author of 14 books, including “In Control at 50+: How to Succeed in The New World of Work” and “Never Too Old To Get Rich.” Follow her on X @kerryhannon.

Click here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more

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Britain on alert over Iran nuclear threat as Israeli strikes continue

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UK-Iranian campaigners have been calling for the Islamic Revolutionary Guard Corps to be proscribed as a terrorist organisation by the UK Government (Photo: Krisztian Elek / SOPA Images / LightRocket via Getty Images)

The British government has made clear its concerns to Israel over possible airstrikes on Iran’s nuclear facilities in retaliation for Tehran’s missile attack last week.

Ministers have said they are urging Tel Aviv to show restraint despite the UK maintaining its support for Israel’s right to self-defence.

Fears that Israel could carry out a devastating attack on Iran rose on Sunday when its defence minister Yoav Gallant warned that country would see the same fate as Gaza and Beirut.

On Saturday Donald Trump urged Tel Aviv to target Iran’s nuclear sites but the Biden administration expressed concern that they would be hit.

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Peter Kyle, the Science Secretary, said that the British government wanted Israel’s response to Iran’s missile barrage to be “proportionate”, adding: “We are urging restraint.”

He told the BBC’s Sunday with Laura Kuenssberg programme: “Israel does have the right to defend itself but we do urge action to be taken that are proportionate, but also will lead towards a de-escalation of the overall situation.”

Asked whether that would mean telling Israel to steer clear of bombing Iran’s uranium enrichment facilities, Mr Kyle said: “We can’t instruct Israel as a sovereign state to do anything, but as key allies we can advise them and the advice is very clear, and it is unanimous from our international allies; that we must exercise restraint.

“We are not giving operational instructions to Israel but it is very clear from the words that I am using and the Prime Minister is using, that actions that lead towards a restrained political solution, based on a ceasefire, those outcomes do determine the actions that need to be taken that would lead towards it and I think that speaks for itself.”

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Mr Gallant said that Iran’s missile attack, which was largely thwarted by its air defence system, “didn’t touch [the] air force – no aircraft was damaged, no squadron was taken out of order”.

He added: “Whoever thinks that a mere attempt to harm us will deter us from taking action should take a look at … Gaza and Beirut.”

An FCDO spokesperson said: “Our priority is to prevent further escalation in the Middle East and we are working closely with our allies to press for a diplomatic solution. We continue to urge all parties to show restraint.”

It was reported by The Sunday Times that UK security chiefs are on alert for an increase in Tehran-backed assassination plots on UK soil, including the targeting of Jewish people in this country.

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It is understood there has been no increase in the threat level in the UK but that officials are alive to the potential risk related to events in the Middle East.

Four UK intelligence sources said the alert was “no surprise”. They said the threat from Iran or Hezbollah remained a constant throughout the conflict, but warned the increase in tensions may provide the spark for UK-based sympathisers to act.

A UK intelligence source told i Iranian assassinations have been “a fairly open threat” for the past year, but warned that the Prime Minister’s support for Israel “will increase the risk of Iranian operators” targeting the UK.

However, the source said the “hardened terrorist threat” is “far stronger” in Europe than UK due to the size of the Jewish diaspora.

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Another UK intelligence source said targeted assassinations may be “less susceptible to Israeli disruption, and therefore a more likely response from Iran-backed forces.

“Small scale terrorist activity, including assassinations, outside the region and therefore including the UK would still be possible and may be less susceptible to Israeli disruption,” they told i.

“If the current UK security and intelligence leadership share this assessment, then they would be right to be on the alert for signs of such activity even if at this stage there is no specific intelligence of assassination plots.”

UK cut aid spending to Lebanon by 90 per cent over five years

The UK has cut aid spending to Lebanon by more than 90 per cent since 2019, official figures have revealed.

Analysis by the Liberal Democrats shows that funding for Lebanon fell from over £200m in 2019-20 to just £7m in this financial year, despite the country facing a humanitarian crisis.

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The UK has announced £10m of aid to Lebanon in response to the crisis there caused by the conflict with Israel.

But the Lib Dems questioned why aid spending had been cut over the last five years to what is widely regarded as a failed state.

LibDem development spokesperson Monica Harding wrote to Development Minister Anneliese Dodds urging her to increase aid spending to Lebanon further, and return to the UK’s target of 0.7 per cent of GDP, which was cut to 0.5 per cent under Boris Johnson.

The aid spending figures are published via the UK Government’s own DevTracker tool.

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Ms Harding said: “With conflict escalating across the Middle East, it’s vital that the UK provides humanitarian support where it is needed most. 

“Clearly one of those places in Lebanon, where sadly UK aid spending has been slashed back under the former Conservative Government. 

“The UK must urgently ramp up aid spending to Lebanon and the region as a whole – and what has been announced by the Foreign Office is welcome, but we need to go much further.

“The Conservatives’ decision to abandon the 0.7 per cent of national income target for international development spending has left the UK with one hand tied behind our back when it comes to responding to international crises like the one unfolding in the Middle East.”

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Historically, UK intelligence has been on high alert for Iran-backed terrorism and assassination campaigns. Last year, police and security services announced they had foiled 15 plots by Iran to either kidnap of kill UK-based individuals it considered “enemies of the regime”.

The announcement came after a London-based Iranian broadcaster, Iran International TV, announced it had “reluctantly” moved operations to the US after mounting safety concerns against its journalists from Tehran.

However, recent significant hits to Hezbollah’s leadership, along with Iran’s supposedly dwindling resources left sources questioning whether attacks on the UK would be a priority.

“Historically western intelligence and security chiefs have regarded Hezbollah as a very effective terrorist organisation and a proxy for Iranian government mischief making in the region and beyond,” a UK intelligence source said.

“Of course they have been badly damaged by Israeli decapitation attacks and disruption to their comms so is maybe not the finely tuned instrument that it was.”

Stephan Blancke, associate fellow at RUSI and expert in foreign espionage activities said: “The threat posed by Iranian intelligence services in Europe is real: for years, attacks have been planned or carried out in Europe that are coordinated from Tehran.

“Especially the Iranian intelligence agency MOIS is increasingly using criminals, for example from the Hells Angels.

“The German Federal Public Prosecutor’s Office is conducting several investigations against Iranians who have been involved in attacks against dissidents, exiled Iranians and critical activists in Germany.

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“Only recently, an Iranian couple from Belgium tried to smuggle an explosive device to Paris in order to use it against an international conference of Iranians in exile.

“They were led by an Iranian diplomat from the Iranian embassy in Vienna who was later arrested. Western intelligence agencies have too little overview of the various Iranian exile groups and dissidents, their political connections in Iran and the resources and interests of certain criminal organisations.”

The UK, alongside the US, took part in a counter-operation against Iran’s aerial bombardment last week, although RAF planes did not have the capability to shoot down ballistic missiles and so did not engage with Iran.

Mr Kyle declined to rule out that the UK military could help Israel attack Iran – although this is seen as unlikely.

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He told the BBC: “We simply don’t know the circumstances of what is happening, might or might not happen in the days ahead, and I think all of your viewers would understand why I’m not going to get involved in operational circumstances for an action that may or may not happen and we don’t know the details of in the days ahead.

“I can tell you that our Prime Minister acts with real steadfastness, thoughtfulness and deep consideration for the rule of domestic and international law. That will guide all of the decisions that this government takes.”

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A168 Dishforth traffic live updates as air ambulance lands after crash

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A168 Dishforth traffic live updates as air ambulance lands after crash


A major road in North Yorkshire has been closed following the accident

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Tim Walz Outmaneuvers Fox News Host as He’s Grilled on Abortion

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The Daily Beast

Tim Walz deftly handled Fox News’ Shannon Bream’s grilling on abortion rights during his appearance Sunday, calling her attempts to steer the conversation to whether there would be limits to how late the procedure would be allowed a “distraction.”

In what was his first solo interview since becoming the Democratic vice presidential candidate, Walz keep his cool and deflect tricky questions.

“I have been clear. The restoration of Roe versus Wade is what we’re asking,” Walz said when Bream asked him on Fox News Sunday whether the Democrats would allow abortion throughout all nine months of pregnancy.

“The law is very clear. It does not change that. That was been debunked on every occasion​​.”

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Bream interjected to claim that when he enshrined the right to abortion and reproductive health care into Minnesota’s statutes last year, the legislation did not have a “single limit through nine months of pregnancy.”

Walz, however, calmly kept on message, continuing, ​​“This puts the decision with the woman in her health care providers.”

​​“The situation we have is when you don’t have the ability of health care providers to provide that, that’s where you end up with a situation in Texas, where they are afraid to do what’s necessary,” he said.

“This doesn’t change anything. It puts the decision back on to the woman, to the physicians, and we know that this is simply to be brought up,” he added.

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When further pressed on abortion laws in Minnesota, the governor pushed back.

​​“This is a distraction from the real issue here is women being forced into miscarriages, women being forced to go back home, get sepsis, potentially die.”

“Maternal mortality rates in Texas have skyrocketed off the charts because of this. This is bad policy.”

Walz also repeated his claim that Trump would go further by signing an “outright nationwide ban.” Questions have been raised over how far Trump could implement policies outlined in Project 2025 but the Republican presidential candidate has stated he would veto any such ban.

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“Are you calling that a flat out lie?” Bream asked Walz.

“Yes, of course. And Senator Vance has in the past said so too,” Walz responded.

He also accused Vance and Trump of making the issue political.

“Now look, they may see this as an election issue. We see it as a right of women to make their own bodily decisions. That’s what the states, like my state, have the ability to put that in.”

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“Let’s be very clear: trying to cut hairs on an issue on this is not where the American public’s at.”

Read more at The Daily Beast.

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Starmer wields the knife after shaky 100 days in office

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After almost 100 days in office, Sir Keir Starmer on Sunday finally decided to get a grip on his stumbling administration. “Keir will always wield the knife when it needs to be done,” said one Labour MP. “Now he has.”

The departure of Sue Gray from her key role as Starmer’s chief of staff was the catalyst for Sunday’s complete overhaul of the Number 10 operation. Many were left wondering why it had taken the prime minister so long.

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Starmer, who hired Gray in 2023 to help him prepare for government, had been loyal to his chief of staff in office, in spite of fierce internal criticism of her management style.

But those close to the prime minister say that a morose and fractious Labour conference in Liverpool last month convinced him he had to draw a line under the mis-steps that had dogged his first months in office.

“Keir came back from the conference pretty chastened,” said one Labour insider. “He realised he needed to get a grip on things.”

In Liverpool party members expressed their concern at how Starmer had cut winter fuel payments for 10mn pensioners, then appeared unable to contain a row over his receipt of £32,000 in “freebie” suits and glasses.

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Gray had become a lightning rod for discontent, with hostile internal briefings about her £170,000 salary and alleged “control freakery”. Labour special advisers, or Spads, claimed she was partly responsible for holding down their salaries.

Gray’s allies said all of this was grotesquely unfair on a hard-working and loyal member of the Starmer team, a view shared by many cabinet members.

But one senior minister told the Financial Times: “It was only a question of when, not if. Not everything was her fault, but the transition to government, the situation with the Spads and the unending freebies clusterfuck were all on her and made her position untenable.”

A person close to the discussions over the Downing Street shake-up said that after returning from Liverpool — via the UN General Assembly in New York — Starmer began lamenting the fact that Gray had “become the story”. 

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Gray acknowledged she had become a “distraction”. She will now take up a role as an adviser to Starmer on relations with the UK’s devolved nations and regions, but her grip on the levers of power in Number 10 is over.

The former civil servant was also blamed for being a bottleneck in appointing people to key jobs, a problem that was rectified by the prime minister on Sunday as he announced a dramatic overhaul of his team. 

Morgan McSweeney, who was on the long march in opposition with Starmer, replaces Gray as chief of staff. It was McSweeney who helped to slay the threat of the Corbynite left and then masterminded Labour’s landslide election victory in 2024.

But some question whether he is cut out to be a chief of staff, especially given his lack of Whitehall experience. “Morgan is very popular with Labour staffers — this is like a players’ revolt in a football dressing room,” said one Labour veteran. “But he’s not the sort of person who puts things down on paper.”

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There was a long-standing narrative at Westminster that McSweeney was part of a “boys club” around Starmer that was treated with suspicion by Gray. 

Starmer appointed two women to work as deputy chiefs of staff alongside McSweeney — Vidhya Alakeson and Jill Cuthbertson — a move seen by some Labour MPs as a riposte to any suggestion that the boys club had won.

Gray did not have any deputy chiefs of staff, an omission seen in Labour circles as contributing to a lack of grip at the centre and a sign of her unwillingness to share responsibility with others. “That was her choice,” said one ally of Starmer.

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While Alakeson and Cuthbertson are highly regarded in Number 10 — the former is Starmer’s political director and the latter is a long-term Starmer lieutenant — Gray’s departure leaves the centre decidedly short of Whitehall experience.

In despatching Gray to the UK’s regions and nations, he has brought into his inner circle people who were already part of his trusted gang. “It’s a circling of the wagons,” said one person close to Starmer.

The exception is James Lyons, a former Sunday Times political journalist, NHS communications chief and TikTok media executive hired by Starmer to beef up his media team, which will continue to be headed by director of communications Matthew Doyle.

Lyons will have a strategic comms role, including oversight of Downing Street’s “grid” of future announcements. It is a common complaint of Labour staffers that the grid, previously under Gray’s control, has been chaotic.

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Pat McFadden, cabinet office minister and part of Starmer’s inner circle, is said by party insiders to have played a key role in the shake-up, being close to both McSweeney and Lyons. 

The result of Sunday’s upheaval is that Starmer ends his first 100 days in office with what looks more like a functioning Number 10 operation. Many Labour MPs, privately, believe it is not before time.

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Incarcerated Youth Benefit from Recent Education Investment

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In an article for The Imprint News, Jeremy Loudenback and Sara Tiano dive into the details of California’s June 30, 2023, signed budget, which incorporates investments in higher education for incarcerated youth and reinforces oversight of educational institutions within youth detention facilities.

The budget administers $80 million for alternative schools, serving students who face various challenges such as behavioral issues and learning disabilities, and $15 million for programs that “connect incarcerated youth to higher education.” County probation departments are required to offer secondary education options in juvenile detention facilities, and county offices of education will also receive additional funds to operate alternative and juvenile court schools.

The goals of these new measures are to improve the lives of young incarcerated individuals, offer a second chance while in detention facilities, and set them up for success afterward. The budget requires education and probation officials to assess the academic status of youth entering and leaving juvenile detention facilities and create an education plan for them.

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In addition, all county probation departments are now required to offer college courses, in-person or online, in youth detention facilities. The goal is to provide transferable college courses that count towards a Bachelor’s degree and allow incarcerated students to earn high school and college credits in any University of California or California State University campus.

Participating colleges will offer on-campus programming, allowing youth to complete their courses after release. This adjustment to the California state budget is seen as a significant step forward, addressing long-standing issues within the system. Katie Bliss, California’s higher education coordinator at the Youth Law Center, described the investment as “nationally historic” for an overlooked population.

Research supports the importance of providing education to incarcerated individuals, with the Vera Institute of Justice breaking down these benefits. Their research shows that recidivism significantly decreases for those who attend college while in detention. Ultimately, taxpayers could be saving $365.8 million annually by increasing educational opportunities in prison.

The budget expands access to higher education and emphasizes individualized evaluations and transition plans for detained students, ensuring they receive the necessary support. Additionally, the budget introduces greater oversight, mandating that the California Department of Education publicly post data from juvenile court schools. This comprehensive approach aims to provide incarcerated youth with the education and support they need to break the cycle of crime and improve their prospects.

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EdSource, a nonprofit group based in California, published an article three days before the budget passed, exploring how this increased investment would support students who have previously faced challenges in traditional schools.

However, since July 7, 2023, no establishment media outlet has covered the importance of investments in education specifically for incarcerated youth. Lack of corporate coverage prevents the public from recognizing the need for incarcerated youth to not only access education but also to receive the funding necessary to facilitate learning.

Sources:
Betty Márquez Rosales, “California’s Most Vulnerable Students May Be Seeing Increased Funding Soon,” EdSource, June 27, 2023.
Jeremy Loudenback and Sara Tiano, “California Invests in Education for Incarcerated Youth,” The Imprint News, July 7, 2023.

Student Researchers: Raeghan Brousseau, Amara Padula, Tara Shea, and Natasha Tykulsky (University of Massachusetts Amherst)
Faculty Evaluators: Allison Butler and Jeewon Chon (University of Massachusetts Amherst)

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▶ Palestinian Youth Indoctrination: How Education and Media Fuel Terrorism from an Early Age

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▶ Palestinian Youth Indoctrination: How Education and Media Fuel Terrorism from an Early Age

Why do so many young Palestinians turn to terrorism? It starts with their education. Between UNRWA textbooks and Hamas TV shows, violence is glorified and pushes kids toward “martyrdom.” Hamas training camps turn childhood into terror prep, with weapons replacing toys. This isn’t just education—it’s grooming the next generation for violence.

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