Squared Away Blog

Upon retiring, you suddenly have access to a chunk of money that’s been accumulating in your 401(k). It’s easy to make a move that incurs unfamiliar tax consequences or otherwise jeopardizes your hard-earned savings. Based on interviews with financial planners, as well as experts at the Center for Retirement Research, which funds this blog, Squared Away assembled the following check list for imminent and new retirees: At least one year before retiring, collect information from: Social Security – how does your monthly check vary, depending on the filing age you select, and how can you and your spouse determine the best strategy for getting the benefits you’ll need? Your employer – is an annuity an option in your 401(k) plan,…

A new study finds that debt burdens have grown for older workers and retirees in recent decades. But this isn’t the first research to reach that conclusion. What is new is whose debt burden is increasing the most: the people who score higher on simple memory and math tests. Across the three age groups the researchers examined – 56-61, 62-67, and 68-73 – the high scorers on the cognitive tests were more likely to have debts exceeding half of their assets in 2014 than the high scorers who were the same ages back in 1998. They also added disproportionately more mortgage debt than people with lower cognition during the study’s time frame, a period when house prices were rising. T…

Are people who claim their Social Security retirement benefits when they’re 62 too sick or impaired to work? Fast forward three years, to when these early claimers turn 65.  They’re about as healthy as those who decided to wait until age 65 to start receiving their Social Security retirement benefits, according to preliminary findings from a study using Medicare spending data as a proxy for health.  The early claimers are also far healthier than people who left the labor force early to go on federal disability. Some 8,500 older Americans were in the study’s sample, and they fell into four different groups: those who claimed a reduced Social Security pension soon after turning 62; those who claimed a larger pension…

New research finds that the people most likely to benefit from target date funds are also the people inclined to invest their 401(k)s in them – unsophisticated investors. Retirement and financial literacy researchers long ago established the pitfalls of our nation’s do-it-yourself system of retirement saving (i.e., people don’t save at all or don’t save enough, and investing is too complex for most people). Target date funds (TDFs) have become an increasingly popular solution to the investment piece of the problem in the wake of the Pension Protection Act of 2006, which allowed employers to use them as the default investment option in defined contribution savings plans. TDFs place a 401(k) participant’s accumulated savings into a broadly diversified portfolio of…

In the late 1990s, six out of ten retirees found retirement “very satisfying.” Today, not even half do, according to a recent analysis of a long-term survey of older Americans. The news isn’t all bad, since the “moderately satisfied” share rose – and moderately satisfied is probably a more realistic goal for most people anyway. But the question of why so few people are very satisfied with their retirement state of mind is difficult to pin down. The survey analysis by the Employee Benefit Research Institute (EBRI) and past academic research provide some clues. Health.  It’s well-established that health and satisfaction are inextricably linked: healthier retirees are happier retirees, according to a 2005 study by the Center for Retirement Research, whic…

Only about half of all U.S. workers in the private sector participate in retirement savings plans at their current places of employment, according to a new report by the Center for Retirement Research. Pension coverage in this country “remains a serious problem,” concludes the Center, which also sponsors this blog. The goal of the Center’s report is to make sense of the myriad estimates of how many Americans are covered at work. One prominent source of data is the federal government’s survey of employers, the National Compensation Survey. The NCS shows that 78 percent of full-time workers, ages 25 through 64, have some type of defined benefit or defined contribution plan available to them at work. But that’s the rosiest…

 The PBS NewsHour has some terrific reporting on an important topic: the job market for the two-thirds of working-age adults who don’t have a college degree. The problem facing many of them is that, despite their hard work, they will earn much less over their lifetimes than college graduates. In stories for the NewsHour, Paul Solman highlights the opportunities available to workers without degrees at a time that many employers are scrambling to find smart, energetic people to fill good-paying jobs with benefits in light manufacturing and the skilled trades. Women of color are catching on and entering fields like carpentry and plumbing – in fact, they are over-represented in the trades. But Solman talked to employers early this…

The cost of employer health insurance has skyrocketed, and workers are picking up some of that growing tab. Amid employees’ grumbling, employers are loath to push more of the cost onto their workers. That’s why the consensus view among major employers, expressed in a recent survey, sounded like a cry for help. Calling rising insurance costs “unsustainable,” the vast majority said they need help from the government either to provide alternative forms of coverage or control health care and prescription costs. Employers “have reached their limit,” said Elizabeth Mitchell, chief executive of the Purchaser Business Group on Health, an employer advocacy organization that collaborated with the Kaiser Family Foundation on the survey. Employers, she said, “are tired of pouring tons…

Most people used to sign up for Social Security when they were fairly young – around 62, which is the earliest age allowed. Not today: fewer than 40 percent are filing for benefits at that age. So what else are we doing differently?  Well, working in retirement is high on the list. About one in three Americans calling themselves retired in a new AARP survey have worked or now work in part-time, seasonal and sporadic jobs or sometimes full-time. Keeping in mind that people don’t always do what they’d planned, boomers’ expectations for work exceed what current retirees are doing. Well over half of workers over 50 plan to find some kind of work after they retire. The seeming oxymoron – working “retirees” –…

The number of employers offering target date funds as an option in their 401(k) plans, and the number of workers using these funds, continue to increase. In 2013, 86 percent of all employer plans offered target date funds (TDFs) – double the share of plans offering them in 2006 – according to Vanguard’s annual report on defined-contribution plans, “How America Saves 2014,” released in June. Vanguard data also support TDFs’ growing popularity among employees: more than half of plan participants now have some or all of their retirement accounts in TDFs, compared with just one in 10 in 2006. TDFs eliminate the need for employees to wade in and make complex investment decisions about choosing and updating their asset allocations…

The housing market has shrugged off the pandemic, and home prices are rising sharply due to historically low interest rates. The market crash more than a decade ago is a distant memory. The total value of the equity in older Americans’ homes has doubled since 2010, hitting $8.05 trillion at the end of last year. The irony is that federally insured reverse mortgages, which allow a long-time homeowner to cash in on tens of thousands of dollars of equity, aren’t very popular. Last year, only 42,000 Home Equity Conversion Mortgages (HECMs) were sold – half as many as in 2010 – according to the U.S. Department of Housing and Urban Development (HUD). One reason HECM reverse mortgages haven’t caught on,…

Some 3.6 million parents are paying off more than $100 billion in debt used to fund their children’s college education. For many parents, the federal Parent Loan for Undergraduate Students (PLUS) was the only way they could afford college, but many are now struggling to make the monthly payments. In a Harris poll in July, nearly one in three said they regret the decision to borrow. If these parents need relief, they have two basic options: enter into the government’s repayment plan for PLUS loans or refinance their federal student loans through a private lender such as a bank. Both options have significant downsides. Anna Helhoski Anna Helhoski, a student loan expert with the financial website, NerdWallet, explained the good…