Squared Away Blog

Determining how much money one will need in retirement is a mathematically and psychologically daunting task for many Americans. But new research has landed on a deceptively simple strategy for prodding workers to save. Employees in an experiment at the University of Minnesota saved more for retirement after researchers provided them with a personalized chart with information similar to that shown below. Each employee’s chart translated a $100, $200, or $500 contribution, made every other week, into the amount of income each of these contributions would generate annually once they retired. If they saved more, they could see that it translated to more retirement income. “We think people may have a hard time making that translation from an accumulation of…

Karen Dobson Kay Dobson is 68, and it’s time to retire from her job as the jack of all trades at the Augusta Circle Elementary School in Greenville, South Carolina. But she isn’t quite as ready for her June retirement as she could’ve been. She recently learned that an admitted unfamiliarity with Social Security’s arcane rules cost her about $31,000 for two years of foregone spousal benefits based on her husband’s earnings. “I had not the vaguest idea that I would be eligible for that,” she said. Dobson is hardly the first person to make a painful mistake like this. People have all kinds of misconceptions about Social Security, or they lack a basic understanding of how it works – that…

The unemployment rate is an incredibly low 4.4 percent, and a Federal Reserve survey released last week shows that American households’ net worth is increasing. Yet all is not well. One in three Americans say they are suffering financial hardships, and another third report they are making it but aren’t exactly thriving. One in five struggles to cover what is most basic: food, housing and medical care. These new findings, which came out of a report by the federal Consumer Financial Protection Bureau (CFPB), aren’t about economists’ traditional, objective measures of security, income and wealth levels. This is about how people are feeling about their financial state of affairs. The common, everyday financial distress expressed in the report is one marker of…

A new report laying out loan data per student at more than 1,000 U.S. colleges can be useful to parents and future students. From the California Institute of Technology and the California Institute of the Arts to the Massachusetts Institute of Technology and Bridgewater State University (also in Massachusetts) – data on debt levels for the 2016 graduating class at public and non-profit institutions are contained in a newly released report by the Institute for College Access & Success (TICAS). TICAS has put together a handy interactive map summarizing the data. An individual college’s data can be found by clicking the state where it’s located and scrolling through the colleges in that state.  Not all colleges are presented, because very…

There’s plenty of evidence of the unfortunate consequences for employees overwhelmed by too many investment options in their 401(k) plans. Studies find that confused employees might not join the plan at all, select investment funds that are not well diversified, or throw up their hands and put an equal amount in each fund offered by their employer. And as employers add more options, the new funds often carry higher fees and produce lower returns. A new study took the opposite tack, examining how employees reacted when one large U.S. employer reduced the number of investment options. The results were lower fees and less turnover, saving employees an average of $9,400 over a 20-year period. Further, their new portfolios were less…

Over the long Christmas holiday, I got a sneak preview of what retirement could be like. Frankly, it was a little boring. I fully appreciate that most workers don’t have the perk provided by my employer, Boston College, which gives us generous time off between Christmas and New Year’s. By cashing in a few unused vacation days prior to Christmas, I was able to string together 16 glorious days off. It felt like a lifetime. After cleaning off my desk, running long-neglected errands, reading a book about the sinking of the Lusitania, wrapping gifts, stocking the pantry, going to a holiday party, exercising at the gym, seeing most of the 2015 Oscar contenders at local cinemas, and getting together wit…

In the 1960s and 1970s, the baby boom generation had a reputation for breaking down societal norms for behavior – and they’re at it again. Between 1990 and 2010, the rate of individuals over age 50 who become newly divorced in a year doubled to more than 10 people affected per 1,000 married people, according to Susan Brown, a sociologist at Bowling Green State University. Studies by Brown and others are emerging that show this important trend of “gray divorce” is having negative consequences for baby boomers’ financial security in old age. “Individuals who go through gray divorce are considerably economically disadvantaged, and they are a growing demographic group,” Brown said. She estimates nearly 650,000 people over 50 were involved…

These federal government resources should be helpful to Squared Away readers ranging in age from 20 to 70: Free credit report: Young adults in particular may not be aware they’re entitled to a free credit report from one of the major credit rating agencies. To ensure the report truly is free, click and follow the links to an outside source recommended by the Federal Trade Commission. To file a paper request or ask for a report by telephone, try the federal Consumer Financial Protection Bureau’s website. New U.S. Social Security Administration blog: The agency started a new blog last month to provide important benefit information under various programs. Here’s a sample of three useful articles on the blog: Replace dog-eared Medicare cards…

Saving should be the centerpiece of any retirement plan today.  But a new survey indicates that many Americans on the cusp of retiring have given little thought to the other key issues they’ll face in retirement. A majority of older Americans recently surveyed by the American College of Financial Services, an educational organization for financial professionals, said they have set a goal for how much money to save to “live comfortably” as retirees.  And, when asked to assess their own progress, they feel they’re doing a good job of it.  Granted, the survey was limited to a select group of about 1,000 people over age 60, all of whom have at least $100,000 in investable assets. But the financial risks…

The financial impact on older people who find themselves out of work goes far beyond the missed paychecks: it upsets well-laid plans for retirement. Stan Bednarczyk, an engineer who was laid off in 2009 by a Michigan automobile supplier, has numerous concerns.  He can no longer contribute to the retirement account sponsored by his former employer.  And since Social Security is based on an individual’s 35 highest years of earnings, his future benefit may be lower when he retires. The total dollar cost of his late-career joblessness, which he detailed in this video, is shocking.   Stan Bednarczyk from Over Fifty and Out of Work on Vimeo. Bednarczyk was among 100 unemployed men and women interviewed for a powerful new video…

Remaining on the job for a few more years may not appeal to many older Americans who long to retire. But in the above video, a compelling case for working longer is made by Steven Sass, an economist with the Center for Retirement, who also edits this blog. Sass explains that delaying retirement improves a retiree’s financial security in three critical ways: The worker can continue to save money for a few more years and will have more time to earn investment income on his savings. ……

One segment of the U.S. labor force sheds light on the continuing struggle to find work: part-time employees who want a full-time job but can’t find one. The U.S. unemployment rate has drifted down during the economic recovery. But the number of people the Department of Labor calls “involuntary part-time” roughly doubled during the recession to 8 million and still remains stuck at this much higher level. Millions of Americans work part-time because they want to, but this involuntary part-time workforce is one more gauge of the slack labor market and lingering pain three years after the Great Recession officially ended. The Labor Department counts part-timers as involuntary if they can’t find a full-time job or if they work part-tim…