Squared Away Blog

Racial differences in workers’ finances are nothing less than shocking: whites have roughly six times more wealth than Latinos and black-Americans and double the income. These age-old disparities will be as familiar to readers as they are to economists. But a clear and updated picture of their magnitude was presented in a recent study. In 2016, U.S. household wealth, regardless of race, still had not rebounded to 2007 levels. But whites made a lot more progress climbing out of the hole created by the plunging stock market and housing crash that ushered in the 2008 recession. The researchers examined changes in each group’s net worth over a decade. Pre-recession, white households had five times more wealth than blacks; this ratio…

Amid a growing awareness that many Americans aren’t properly prepared for retirement, various efforts have ramped up to push the non-savers to save. A notable initiative is occurring in state government. California, Illinois, and Oregon have started IRA savings programs that require private employers to offer the state-sponsored IRAs to workers if the company doesn’t already have a 401(k). Cell phone apps are also popping up to make saving easier. One such app – Finhabits – is being marketed directly to Latinos, who financial experts say are particularly unprepared for retirement. Two out of three Latino workers aren’t saving in a retirement plan, often because they work in low-wage restaurant and hotel jobs that don’t offer one. The Finhabits a…

“We are rapidly approaching the point where we will simply be unable to afford medical care,” says Dr. Edward Hoffer. This is no exaggeration, according to the Henry J. Kaiser Family Foundation: health insurance deductibles and copayments are rising so fast that a significant share of working families have great difficulty paying for their care. “We as a society have to decide whether healthcare is a right or a privilege,” Dr. Hoffer said. “I happen to think it’s a right. We can’t all drive a Mercedes but every American deserves to have access to healthcare.” His book, “Prescription for Bankruptcy,” provides his insider’s view of why healthcare costs keep going up. For 46 years, he has worked in Massachusetts as…

In April, Trudy Schuett will have a procedure to save a tooth, which she estimates a dentist would charge $3,000 to $5,000 to do. But Schuett, who lacks dental insurance, will pay about $1,000, because the procedure will be performed by dental students at Midwestern University Clinics in Glendale, Arizona. Her cleanings at the school are affordable too. Regular clinic visits have saved “buckets of money,” she said. She is one of those resourceful retirees who always finds a way. But two out of three people over 65 do not have dental insurance, according to the Henry J. Kaiser Foundation, often because they lose the coverage when they leave their employer. Medicare does not pay for routine dental expenses, thoug…

If you don’t know this fact about Social Security, join the club. The percentage of earnings for all U.S. workers combined that is subject to the Social Security payroll tax is falling. Growing income inequality is the reason. Thirty-five years ago, Social Security taxes were levied on 90 percent of all workers’ earnings. By 2016, this taxable share of earnings had declined to 82.7 percent, according to federal data, and it will continue to drop over the next decade. The payroll tax is 12.4 percent of an individual worker’s earnings, with half deducted from his paycheck and half paid by the employer. But the tax has a cap: once earnings reach $132,900 – the cap for 2019 – they do…

A son uses his elderly mother’s ATM card at casinos and liquor stores or takes her to the bank to withdraw money from her account. A woman reports that her sister stole thousands of dollars’ worth of jewelry from their mother, who suffers from dementia. An elderly couple assigns power of attorney to their son, only to watch him sell their house and spend the proceeds he was supposed to use to create a living space in his home for his parents. News accounts like these are rare. But reports about financial abuse of the elderly are increasing. The problem lurks largely in the shadows, because parents view it as a private family affair and are loathe to file a…

In 2007, the majority of workers in The Netherlands were retiring by their early sixties to take advantage of the country’s generous pension scheme. Then came a sweeping 2009 policy that rewarded older workers with a tax break if they remained employed and active. In a new study, researchers used this tax break – the Doorwerkbonus, or continued work bonus – to ask the question: do people who worked longer in response to this policy also live longer?  The short answer is “no” for women but “yes” for men. Delaying retirement increased men’s lifespans by three months, compared with a group that was not eligible for the bonus, possibly because working longer improved their health. The tax break was t…

Depressing or eye-opening? An online tool tells you where you stand financially by stacking up your net worth against other Americans. The calculator compares a family’s net worth – financial and other assets minus debts – with all other U.S. families. Homeowners can choose to include the value of their home equity in their total net worth – or not. Older people have had more time to accumulate wealth, so the rankings are based on the age of the household’s primary wage earner. The comparison is made with 2016 data from the Federal Reserve Board’s triennial Survey of Consumer Finances, which is the gold standard for personal financial data. Since family – not individual – data are being compared, peo…

Decisions about which college to attend or degree to pursue are increasingly driven at least in part by this consideration: will I be able to pay back my student loans? Countless things determine how much someone earns – smarts, rich or poor parents, high school or graduate degree, being in the right place at the right time. But LendEdu’s new ranking of starting salaries for graduates with bachelor’s degrees from some 1,650 U.S. colleges is essential information, especially when debt is the only option to finance college. A degree is almost always worth the investment. Georgetown University estimates workers with a bachelor’s degree earn $1 million more over their lifetime than high school graduates. Post-secondary degrees have even bigger payoffs…

Aging is not, as the cliché goes, for the faint of heart. If a woman makes it to 65, she can expect to live at least 20 more years. Three new books written by or about the elderly provide a wonderful roadmap to aging with grace, introspection, gratitude, and humor. “Coming of Age: My Journey to the Eighties” by Madeleine May Kunin The former Vermont governor and ambassador to Switzerland has authored books about politics, feminism, and women as leaders. In her new memoir, she has blossomed into an essayist and poet. Kunin, who is 85, muses about defying “death’s black raven” on her shoulder. The color red is one way to achieve this. She bought a Barcelona Red Prius…

Motherhood, career anxiety, menopause – women, throughout their lives, move from one psychological stressor to the next. Well, ladies, there’s hope: your stress should start to ease around age 60. With the #MeToo movement against workplace abuse of young adult women dominating the headlines, there’s a quieter movement of baby boomer women exploring what it means to get old. Book publishers are flocking to writers of self-actualization books like “Women Rowing North: Navigating Life’s Currents and Flourishing as We Age” and “50 After 50: Reframing the Next Chapter of Your Life.” Perhaps publishers sense a market for these books because women of all ages suffer depression at rates two to four times higher than men. But a study in t…

One way baby boomers adjust to longer lifespans and inadequate retirement savings is to continue working. There’s just one problem: it can be more difficult for some people in their 50s and 60s to get or hold on to a job. But things are improving. The job market is on a tear – 300,000 people were hired in January alone – and baby boomers are jumping back in. A single statistic illustrates this: a bump up in their labor force participation that resumes a long-term trend of rising participation since the 1980s. In January, 65.1 percent of Americans between ages 55 and 64 were in the labor force, up smartly from 63.9 percent in 2015. This has put a halt…