Squared Away Blog

It’s usually not talent or street smarts or brains that make people wealthy and comfortable. It’s the luck of having rich parents. But there is another way to get there, one that is within reach: becoming the first generation in the family to earn a college degree. A new study by the Federal Reserve Bank of St. Louis, using the latest federal data on household finances, measures the impact of having that degree – or not having one – on wealth and income. Although the ranks of college-educated Americans have grown over the past quarter century, people lacking a degree still make up a substantial majority – two out of three Americans. ……

Seven years ago this month, this personal finance and retirement blog debuted. How things have changed. For one thing, back in 2011, a lot more people were reading blogs and newspapers on their clunky desktop computers. In recognition of the now-ubiquitous smart phone – more accurately, a computer that happens to have a phone – we just redesigned how Squared Away looks on phones to enlarge the type and make the articles easier to read.  Our older readers will appreciate this update. Year 7 is also an opportunity to restate the blog’s mission, which, frankly, was not fully refined in the early years.  In some ways, our mission has not changed: we continue to emphasize retirement security and personal finance, with a…

Debt is stressful. But did you know your stress level depends on the type of debt you have? Credit cards cause far more stress than first mortgages and lines of credit, a study by Ohio State researchers finds. The more striking finding is that reverse mortgages, which allow people over age 62 to tap the equity in their homes, may reduce stress – at least temporarily. The researchers used a simple example to illustrate the magnitude of credit card stress. Charging $640 on a card is as stress-producing as adding $10,000 to a mortgage. Credit cards are more stressful than home loans, because the balances on high-rate cards increase quickly when they’re not paid off, and the debt is not…

Kathleen Rehl’s husband died in February 2007, two months after his cancer diagnosis. She has taken on the mission of helping other widows process their grief, while they slowly assume the new financial responsibilities of widowhood. Rehl, who is 72, is a former financial planner, speaker, and author of “Moving Forward on Your Own: A Financial Guidebook for Widows.” She explains the three stages of widowhood – and advises women to take each stage at their own pace. Question: Why focus on widows? Rehl: After a husband dies, and whether it’s unexpected or a long-lingering death, there is a numb period. Some widows refer to it as “my jello brain” or “my widow’s brain.” It’s a result of how t…

What the heck is a representative payee? Social Security approves a family member or, less frequently, an organization to receive benefits on behalf of an individual who is old and infirm or has a disability. The representative is required to ensure that the benefits are being used to meet the needs of the person in their care. To gauge how well the program is working, Travis Labrum at the University of Pittsburgh conducted lengthy telephone interviews with five people with a mental illness who receive their benefits through a family member and with seven family members acting in that official role. He said that two out of three people who have family representatives managing their finances said they are fairly…

Edward, Ashley, and Kirby Cash Edward Cash would really rather spend his hard-earned paychecks from the Memphis Police Department on his daughter than on humdrum necessities like student loans, replacing a broken-down car, or saving. “I need money, as much money as I can to take care of this new human in my life,” Cash said about 4-year-old Kirby. Of course, he and his wife, Ashley Cash, a Memphis city planner, pay their bills, in between doting on Kirby.  But college loans are different: they get help.  The city government pays down $50 a month on each of their loan balances – as it does for some 600 employees. In May, Memphis joined Fortune 500 companies in the vanguard of employers…

By their early 60s, four out of five workers have chronic health problems. One in four has developed some type of physical or cognitive limitation. If these problems force them to stop working, they can apply to Social Security for disability. But developing a disability late in a career still has long-term financial consequences. These workers not only give up their steady paychecks. Their preparations for retirement are also derailed at a critical time. A 2018 study in the Journal of Disability and Policy Studies quantifies the financial fallout. Four groups were compared, each ranging in age from 67 to 69. One started receiving disability benefits sometime between 58 and 62. A second group went on disability between 62 and…

Enrollment in the Medicare Advantage plans that private insurers offer as an alternative to traditional Medicare coverage has more than doubled over the past decade, the Kaiser Foundation reports. The share of the Medicare population enrolled in these private plans is 30 percent, up from 13 percent in 2005, the non-profit foundation said. The reason for this dramatic growth: Medicare Advantage became a better deal for older Americans in the wake of a 2003 increase in federal subsidies to insurance companies offering the plans. The federal government subsidizes insurers through its reimbursements for the care they cover for older Americans enrolled in Medicare Advantage. Those payments were increased in 2003. Insurers responded by reducing beneficiaries’ copayments and cost-sharing in t…

A 65-year-old woman in Houston can pay $5,300 a year for Medigap’s Plan C policy or she can buy a policy with exactly the same coverage from another insurance company for $1,700 a year. A 65-year-old Hartford, Connecticut, man can spend anywhere from $2,900 to $7,400 annually for the most popular and comprehensive Medigap policy – Plan F. The price disparity for Plan A for a 75-year-old man in Manchester, New Hampshire, is also large: anywhere from $1,820 to $6,301. These are fairly typical of the enormous differences in the premiums that consumers across the country are paying for their Medigap policies. The price disparities are “extraordinary and unable to be justified purely by the coverage that they’re offering,” said…

The Squared Away Blog’s focus is on how informed financial decisions can improve one’s personal finances or retirement prospects.  But much that impacts our standard of living is not in our control. One example is the cost of consumer goods, healthcare, and renting or buying a home, which vary widely from one city or region to another.  To highlight this variation, the Tax Foundation in Washington, D.C., used recent data from the U.S. Bureau of Economic Analysis to create the cool interactive map below, which shows locations with the highest cost of living (bright orange) and the lowest (bright turquoise). Running a cursor over the map displays metropolitan and rural areas and their comparative living costs, measured in terms of…

It is virtually impossible to function in the modern world without a computer or cell phone and broadband. But paying the monthly cell or cable bill can be a stretch for low-income workers and retirees. Congress recognized the importance of having access to the Internet during COVID’s months-long isolation, passing a $1.4 billion program to subsidize broadband. That program, which is run by the FCC, is running out of money. But a more modest federal program in existence since the 1980s, Lifeline, is still in operation. Lifeline subsidizes up to $9.25 per month for cell or Internet service. This is one-third the size of the COVID subsidy that’s expiring. But every little bit helps. Three groups are eligible. Workers and…

In a new survey asking retirees what surprised them about being retired, the big winner – for 43 percent – was how much they’re enjoying it. The rest of the survey indicates that the freedom that comes with leaving the labor force often serves to leaven the considerable sacrifices some have to make for financial reasons. One in four retired households, for example, agree they are “forced to live more frugally than we wanted,” and one in 10 said they’re “spending their nest egg too fast,” according to the survey, fielded in 2023 by Hearts & Wallets, which provides data to the financial industry. I also suspect that one pleasant surprise – having more income than when they were working…