Squared Away Blog

It’s long been known that people with high earnings tend to live longer than low earners. But this gap in life expectancy has widened into a gulf. For example, high-earning men born back in 1912 lived about eight months longer than their counterparts in the bottom half of the income range. This longevity gap increased to five years for men who were born in 1941 and are now in their late 70s. The disparity for women is similar, but not as extreme. This growing longevity gap has important implications for Social Security. The program’s intent is to be progressive – more generous to lower-income retirees.  But the unequal life spans have significantly reduced that progressivity, concludes Matt Rutledge in a…

As the outlines of the student loan crisis were coming into focus, this blog featured a video of new college graduates dazed and bewildered by the size of their monthly loan payments and the intrusion on their lifestyles. Beth Kobliner, a personal finance speaker and journalist, has a surefire antidote: talk to your teenager early and often so they know what they’ll be getting into if they borrow money for college. She explains how to do this successfully in a new series of helpful, breezy videos. She recommends that parents make the early conversations light and easygoing. Have the modest goal of encouraging your freshman in high school to start thinking about college broadly. Ask about his or her aspirations, interests,…

A Squared Away reader wrote recently that he and his wife saved $2,400 a year by paying cash for their medications.    When a pharmacy sells a prescription drug to a customer, the health insurer reimburses the pharmacy at a negotiated rate that covers its cost for the drug, its dispensing fees, and any additional markup. It’s often the case that a patient’s copayment exceeds the pharmacy’s reimbursement, resulting in an overcharge in the copayment. More than one in four copayments were overcharges in a March analysis in the Journal of the American Medical Association of some 4,000 outpatient drugs and 9 million insurance claims by people of all ages. We asked Mohamed A. Jalloh in Napa, California, to guid…

Retirement clearly is not a priority for far too many young working adults. Large minorities of the 22- to 37-year-olds who responded to a recent LendEdu survey said their retirement saving every month amounts to less than they spend on various categories of consumer goods. Nearly half of them report they spend more on dining out than on retirement saving. Almost one in three spend more on alcohol or new clothes, and one in four spend more on streaming services such as Netflix and Spotify. What that indicates is that a lot of them aren’t saving very much. It might seem unfair that saving for retirement is such an urgent matter for someone not yet out of their 30s. After all,…

Walter Mischel, who used marshmallows to test children’s ability to delay gratification, died recently, but his lesson never grows old. For those who aren’t familiar with his famous test, a young girl or boy sits at a table with a single marshmallow on a plate. The tester tells the child that he or she can eat the marshmallow right away, but waiting to eat it until the tester comes back into the room will bring a big payoff: a second sweet, puffy morsel. Watching the children in this video squirm as they wrestle with their decisions brings to mind the adult equivalent. A desire for immediate self-gratification can come at the detriment of any number of personal financial decisions. Lik…

Thomas Uttormark When Thomas Uttormark turned 65 in 2010, he researched his Medigap options on the Medicare.gov website and chose a plan with a premium of around $100 a month. As his premium inched up over the next two years, he decided to apply to another insurance company to see if he could reduce the cost of his policy. Since the federal government dictates the coverage amounts under each of the 10 Medigap plans, he reasoned, his existing insurer’s Plan N provided exactly the same coverage as any other insurer’s Plan N – and the new plan might be cheaper. “I thought it was no big deal to switch,” said the 73-year-old Uttormark. However, switching did prove to be a…

If an alien were to drop in to study earthlings’ retirement, it would have to conclude that saving is either nearly hopeless or super easy. Many Americans approach retirement planning with dread – hardly surprising, given that only about half of working-age adults are on track to have sufficient savings to retire in the lifestyle they’ve grown accustomed to while working. But there purports to be an easier way – and it’s on YouTube. Googling “retirement” turns up all kinds of outlandish promises of nirvana for regular folks.  Examples of YouTube titles are: “Retire Young. Retire Rich.” “Guaranteed Ways to Retire Rich.” “How to Retire in 10 Years – Much Easier Than You Think.” You get the picture. Don’t b…

As Americans were riveted to the spectacle of teetering Wall Street behemoths in 2008, another ruinous tragedy was beginning to unfold: a national foreclosure crisis. Black and Hispanic homebuyers were hit hardest by the foreclosures that resulted from unbridled sales of predatory subprime mortgages, which exceeded $500 billion annually at the market’s peak. In the decade since the financial crisis, the stock market has rebounded smartly, but the damage to minority communities remains.  At the height of the foreclosure crisis, entire neighborhoods were littered with bank foreclosure sales and realtors’ signs advertising sales of the properties. About 30 percent of black and Hispanic borrowers’ homes in total have gone into foreclosure in the years since the housing market crash, compared…

One in five Americans is burdened by unpaid medical bills that have been sent to a collection agency. Medical debt is the most common type of debt in collections. This burden falls hardest on lower-paid people, who have little money to spare between paychecks.  These are the same people the 2014 Medicaid expansion under the Affordable Care Act (ACA) was designed to help.  Some 6.5 million additional low-income workers were getting insurance coverage just two years after Medicaid’s expansion, which increased the program’s income ceiling for eligibility in the states that chose to adopt the expansion. The evidence mounts that this major policy has improved the precarious finances of vulnerable households. A new study of the regions of the country wit…

Anthropologists took a deep dive into Middle America’s clutter a few years ago, and here’s what they found: A wall of shelves holding hundreds and hundreds of Beanie Babies and dolls. Giant packs of multiple paper towels, cleaning fluids, Gatorade, and Dixie cups piled high in the garage or laundry room. Frozen prepared foods jam-packed into twin refrigerators in the kitchen and garage – enough to feed a family for weeks. I write frequently about the financial challenges facing the middle class today and their perception that the American Dream is slowly and inexorably eroding. This feeling is very real. But surely hyper-consumerism has something to do with our financial stress. U.S. households have more possessions than in any other…

When the economy is expanding and more people are working and earning more, they can afford to have more babies. But that time-tested connection between the economy and fertility seems to be broken. During the recovery that followed the 2008-2009 recession and continues today, the U.S. fertility rate has dropped quite a bit. Lower fertility is of interest to retirement experts because it has serious implications for our aging population.  AARP’s Public Policy Institute predicts a decline in the number of family members and friends available in the future to care for the elderly. Fewer babies also mean fewer workers will be paying into Social Security, in the absence of an increase in immigration. Of course, fertility rates in developed…

Despite numerous state efforts to crack down on fly-by-night firms falsely claiming to reduce or eliminate young adults’ student loans, new firms keep popping up. Their social media pitches and websites promise borrowers things the companies can’t possibly deliver on. They appeal to potential customers struggling to pay student loans with slogans like “Get Rid of Your Student Loans Today!” or “$17,500 in Up Front Forgiveness” – “100 percent guaranteed!” In a high-stakes game of Whac-a-Mole, attorneys general in numerous states have repeatedly brought legal actions against these so-called “debt relief” companies in cases going back at least four years. Massachusetts resolved one case this past summer, and Pennsylvania filed a lawsuit last fall.  Florida has aggressively pursued several debt relief companies recently…