Squared Away Blog

Baby boomers love to discuss this age-old question: Should I pay off the mortgage before retiring? Our blog readers fell into two camps in their comments on a recent article. Some made an emotional argument – that a mortgage-free retirement makes them feel secure. The other camp argued that paying off the mortgage does not make financial sense. The article, “Boomers Repairing their Mortgage Finances,” described research showing that boomers have sharply cut what they owe on their mortgages by paying extra in the years since the housing market bust. People naturally pay more of this debt as they age. But the boomers’ rapid payoffs partly explain why 40 percent to 50 percent of Americans in their 60s no longer…

As the pandemic was sinking into our collective consciousness a year ago, Congress, fearing economic calamity, allowed Americans to temporarily halt their mortgage and student loan payments. By the end of October – seven months after President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act – Americans had postponed some $43 billion in debt, including car loans and credit cards, which many lenders deferred voluntarily. Billions more are still being added to the total amount in forbearance. Fast action in Congress “resulted in substantial financial relief for households,” says a new study by researchers at some of the nation’s top business schools. Their recent analysis found that the assistance went where it was needed – to “financially…

Some people lose old retirement accounts because they forget about them. Others don’t want the hassle required to retrieve small amounts. And workers who change jobs fairly often can leave a lot of small accounts in their wake. As a result, millions of dollars of retirement wealth – in pensions, 401(k)s, IRAs, profit-sharing plans, and annuities – sit in state repositories of unclaimed property. So how can workers and retirees be united with their long-lost money? To answer this question, a new study contrasts what has happened to unclaimed retirement accounts in two states with vastly different approaches to handling them: Wisconsin and Massachusetts. Wisconsin in 2015 began to use Social Security numbers to automatically match up and return misplaced…

Most state and local governments provide their employees with traditional pensions, which are nice to have. But not all pensions are equally generous. The monthly benefits vary from one place to the next, and some governments have cut costs by reducing pensions for their newest hires. Further, one in four public-sector workers aren’t currently covered by Social Security, because their employers never joined the system. A logical back-up plan for these workers would be to contribute money to the supplemental savings plans that most public-sector employers provide. When the workers retire, they can add the money saved in their accounts – a 401(k), 401(a), 457 or 403(b) – to their pension benefits. But researchers at the Center for Retirement Researc…

The Affordable Care Act (ACA) has reduced families’ medical costs significantly. The ACA’s main goal was to provide coverage for the first time to workers who lack employer health insurance. But the expansion of free or subsidized health care to millions of parents with low and modest incomes has improved their financial stability and freed up money for their families’ other critical needs, concluded a new University of California at Davis study. The main way the ACA expanded coverage was by giving states the option of providing Medicaid to workers earning up to 138 percent of the federal poverty level. The law also increased the number of children with health insurance, because federal and state outreach during the Medicaid expansion…

The COVID-19 economy is really a tale of two worlds. The stock market and housing market have largely shrugged off the economic slowdown. But severe financial problems are brewing for millions of workers who have lost their jobs or are earning less in a lackluster economy. The assistance passed by Congress will certainly help. Still, half of all workers reported in a Transamerica Institute survey late last year that they are experiencing at least one employment disruption, whether a layoff, reduced work hours, shrinking paychecks and commissions, or an early retirement. A crisis also looms for thousands of renters if the Centers for Disease Control allows its eviction moratorium to expire at the end of this month. Paying taxes is…

Manufacturing workers file more applications to the federal disability program than any other workers. What seems new is that jobs like administrative assistant and retail worker aren’t that far behind. Is one possible explanation that the computerization of once-routine occupations like these plays a role in decisions to apply for disability benefits? Consider the example of a retail worker with a bad back who is laid off, or perhaps she quits because she struggled to handle the cognitive challenges of increased automation. Even simple tasks such as processing customer transactions or locating a product at another store now require computer skills. And the worker’s skills may not match up with the technical qualifications needed to find a new job in…

The housing market collapse more than a decade ago inflicted a lot of financial damage on baby boomers nearing retirement. But a new study finds that some have been trying to make up for lost time by rapidly reducing their mortgage debt. Since the Great Recession, the boomers who were born in the 1950s – they are now in their 60s – have paid down more than 40 percent of their remaining mortgages and home equity loans, on average – a much faster pace than their parents did at that age. Not all the damage from the Great Recession can be repaired, however, because many people lost their homes in the wave of foreclosures. For example, the homeownership rate for…

Something remarkable is happening in the economics profession. Top researchers in the field have begun arguing for policies to alleviate growing U.S. income and wealth inequality. For decades, inequality wasn’t taken very seriously by economists. But that view “has changed dramatically,” said James K. Galbraith of the University of Texas at Austin, who moderated a Zoom panel at the annual meeting of the Allied Social Science Associations last week. Inequality, Galbraith said, has “become one of the most important questions economists face.” And COVID-19, argued Nobel laureate Joseph Stiglitz, a panelist, “has brought out very forcefully the nature of the inequalities in our society” and has “exacerbated those inequalities.” The pandemic’s effects include larger increases in unemployment for low-wage workers,…

First came the denial. Jay Reinstein co-hosts a radio call in program every Tuesday. Jay Reinstein’s unwillingness to accept that he had early onset Alzheimer’s disease was equal in magnitude to the responsibilities he would have to give up as the assistant city manager of Fayetteville, North Carolina. He was afraid the people working for him would judge him. But disclosing his condition to coworkers was unavoidable. After Reinstein, who is 59, was diagnosed in March 2018, his doctor made this very clear: “You’re in a visible position and making decisions. You’ve got to tell them.” With encouragement from a therapist, Reinstein informed his boss, and together they mapped out a plan for telling the city’s elected officials and employees…

2020 was a year like no other. But despite the pandemic, most baby boomers’ finances emerged unscathed. The stock market rebounded smartly from its March nosedive. And the economy has improved, though it remains on shaky ground. Our readers, having largely ridden out last spring’s disruptions, returned to a perennial issue of interest to them: retirement planning. One of their favorite articles last year was “Unexpected Retirement Costs Can be Big.” So was “Changing Social Security: Who’s Affected,” which was about the toll that increasing the program’s earliest retirement age could take on blue-collar workers in physical jobs who don’t have the luxury of delaying retirement. COVID-19 in the nation’s nursing homes has caused incomprehensible tragedy. A nursing home advocat…

Rather than look back on a bizarre and painful 2020, let’s look ahead to the bright side: a vaccine. It is truly remarkable that top-notch scientists have been able to create several vaccines in record time. Producing and delivering them will be another hurdle, and questions remain about side effects and how long a vaccine will protect us. Many Americans’ reluctance to strictly adhere to public health standards will unfortunately slow our ability to put the virus completely behind us. But scientists and public health officials seem confident the vaccines can eventually snuff out this once-in-a-lifetime pandemic. Only then can we get back to our normal activities, such as traveling, eating at restaurants, and shopping – in person, rather than…