Squared Away Blog

Unlike the United States, the United Kingdom has implemented bold reforms to its retirement system over the past decade. Two of the biggest changes were gradual increases in the minimum age for collecting a pension under the national social security program and requiring private employers to automatically enroll their workers in an employee savings plan. The goals of the reforms were to keep government spending in check and encourage individuals – who are living longer – to work longer, while helping them build up more private savings through employer-based plans. On balance, the notion is that workers will end up better prepared financially when they retire. Time will tell how successful these reforms will ultimately be. But, so far, t…

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…

In 2015, the journal Pediatrics estimated some 3 million children were living with grandparents – and the number is certainly higher today. Grandparents find themselves in a caregiving role in the aftermath of parents’ myriad personal traumas, including opioid addiction, suicide, incarceration, and now COVID-19. In this excellent PBS NewsHour video, “Grandfamilies,” grandparents tell journalist Stephanie Sy about the financial and emotional toll of caring for children. Despite the challenges, they wouldn’t have it any other way. But the financial strain is real. Some of the people Sy interviewed said their childcare duties have forced them to close businesses, and others are earning less due to the pandemic. Lisa Banks stretches herself thin helping each of her three grandchildren wit…

For most of the 20th century, life expectancy was on the rise. Yet older Americans were retiring at younger and younger ages. That changed in the 1990s. Life expectancy continued to rise, but retirement ages started increasing too. Many significant developments are behind the dramatic shift in retirement habits, including the decline of private-sector pensions, changing attitudes about working women, and bigger financial incentives from Social Security for people who remain in the labor force in order to get a larger monthly check when they finally retire. Given all of these changes, Urban Institute researchers wondered whether the dramatic longevity gains experienced by the people who make it to their 50s and 60s could be counted as another reason for…

To lift families out of poverty during the pandemic, Congress is on the verge of passing a substantial increase this year in the standard child tax credit as part of President Biden’s broader relief package. But despite the sharp divide over the $1.9 trillion package, some senators – both Democrats and Republicans – want to permanently increase federal assistance to families. Their goals range from reducing racial inequality and rural poverty to providing more financial stability for middle- and working-class parents. The prospect of a bipartisan plan for increasing assistance to parents beyond this year is welcomed by advocates for the poor and lower-income workers. The proposals represent a belief “that all of society benefits when children are doing well,”…

Largely missing from the debate about raising the federal minimum wage is how much its value has eroded over the past 50 years. The current federal minimum is $7.25 an hour. If the 1968 wage were converted to today’s dollars, it would be worth about $12 an hour. At $7.25 an hour, a full-time worker earns just over $15,000 a year before taxes, which is less than the federal poverty standard for a family of two. The Biden administration has proposed more than doubling the federal minimum to $15 by 2025, and one proposal in Congress would begin indexing the minimum wage to general wages so it keeps up with inflation. A $15 an hour minimum isn’t enough, said on…

Blue-collar workers who end up applying for federal disability benefits find themselves in that position for a variety of interrelated reasons. A dangerous or physically demanding job can either cause an injury or exacerbate a medical condition that could lead to a disability. And people with limited resources in childhood often develop health problems earlier in life, and their circumstances can limit their access to job opportunities, making them more likely to end up in dangerous or physically demanding jobs. A new NBER study untangles all these factors to clarify who applies for disability and which applicants ultimately receive benefits through Social Security’s rigorous approval process. Researchers at Stanford and the University of Wisconsin linked a survey of Americans 50…

Since the 1980s, the share of the U.S. population over 65 has grown steadily. At the same time, the share of low-income older people living in nursing homes has declined sharply. New research by the University of Wisconsin’s Mary Hamman finds that this trend is, to some extent, being driven by an increasingly diverse population of Hispanic, Black, Asian, and Native Americans. They are more likely to live with an adult child or other caregiver than non-Hispanic whites, due, in some cases, to cultural preferences for multigenerational households. Nursing home residence is also declining among older white Americans. However, in contrast to the Black population, whites are increasingly moving into assisted living facilities. This creates what Hamman calls a “potentially…

   Save. Budget. Spend less on takeout. “We know what we need to do,” financial behavior expert Wendy De La Rosa says. “The question is how to do it.” Consider one of the pandemic’s lessons for workers: it’s important to build up an emergency fund for a potential financial catastrophe. But how to translate that into action? De La Rosa, who founded the Common Cents Lab to help low-income workers manage their limited resources, has conducted research showing that people can overcome the psychological barriers to saving by changing the financial cues around them. In this Ted video, she provides three practical tips, one of which she applied to her own life. After spending $2,000 in a single mont…

The prospect of retiring opens a Pandora’s box of questions. But one big question dominates all the others: How will I manage my finances when I retire? This is a vexing problem, and baby boomers could use some help thinking it through. To ease the process, a team at UCLA and Cornell University led by David Zimmerman, a UCLA doctoral student, created an online decision tool. In an experiment, they found that the tool might help future retirees understand how to smooth out their income over many years and make their savings last. The results are preliminary, and the researchers are refining their analysis. But for the initial experiment, they recruited 400 people, ages 40 through 63. The participants wer…

The toughest part of Paul and Cathy Brustowicz’s decision to relocate from New Jersey to Summerville, South Carolina, was leaving behind their two grandchildren. The retirees also miss the theater and dinners in Manhattan. A big advantage of South Carolina, though, is “more house for the money,” Paul Brustowicz said. The couple also had a few old friends who were already living there, and the warm weather is nice, though it, too, involves a tradeoff: high summer humidity and hurricane season. As for amenities, it’s a quick drive to Charleston for dinner, the airport, and the Medical University of South Carolina. “Overall, it was the right move for us,” he said about the 2012 relocation. South Carolina ranked a very…

In the COVID-19 downturn, this blog has had a steady supply of stories and statistics about the damage being done to low-income and middle-class families. That’s one perspective on the pandemic. The growing billionaire class is another one. Since last March, the nation’s 660 billionaires have added more than $1 trillion to their wealth – a 39 percent increase. Their combined net worth is now $4 trillion, which is nearly double the $2 trillion held by the 165 million Americans in the bottom half, according to the Institute for Policy Studies’ new report. “It’s a troubling sign that too much of society’s wealth and income is flowing upwards to that small group of people,” Chuck Collins of the Institute for…