Squared Away Blog

Men with high school diplomas are retiring around age 63 – three years before college-educated men.  The gap in their retirement ages used to be smaller. The reasons behind the current disparity are explained in a review of research studies on the topic by Matt Rutledge, an economist with the Center for Retirement Research.  The trend for women is similar, though their story is complicated by a sharp rise in their participation in the labor force in recent decades. Rutledge provides four reasons that less-educated men are still the lion’s share of early retirees: Health. Older Americans are generally getting healthier and living longer – so why not wait to retire? Well, the health of less-educated people is poorer and…

It’s not too late to sign up to attend the Retirement Research Consortium’s (RRC) 20th annual meeting in Washington on Thursday and Friday, August 2 and 3. Its purpose is to provide RRC researchers from around the country an opportunity to present their working papers to colleagues, the press, policy experts, and financial professionals. The consortium’s studies are all funded by the U.S. Social Security Administration. The researchers will cover a variety of financial and policy issues facing workers and retirees. Topics will include the gains in longevity when retirement is delayed, widows’ poverty, and an analysis of low-income workers’ earnings and retirement prospects. Another paper explores the decline in the share of total U.S. earnings that are being covered by Social Security…

A theme runs through the infographic below: aging baby boomers are still a force of nature. Created by Georgetown University’s Center for Retirement Initiatives, the infographic uses demographic data to show that boomers remain important to the labor market even as they grow older. More than 9 million people over 65 work – a steep 65 percent increase in just a decade. Two things primarily explain this increase. One reason is hardly surprising: the post-World War II baby boom that created the largest generation in history also created the largest living adult population (though Millennials will soon catch up). On top of this, baby boomers are working longer for myriad reasons – among them, better health, inadequate retirement savings, and…

Two of our readers’ favorite articles so far this year connected difficult bread and butter issues – personal finance and retirement – with a far more pleasant topic: travel. The most popular blog profiled a Houston couple scouting locations for a dream retirement home in South America, which has a lower cost of living.  Another well-read blog was about Liz Patterson, a young carpenter in Colorado who built a $7,000 tiny house on a flat-bed trailer to radically reduce her expenses – so she could travel more. The downsizing efforts of 27-year-old Patterson inspired several older readers to post comments to the blog about their own downsizing. “From children’s cribs and toys in the attic, to collectible things from my…

The grocery shopping for five is over, the family cell phone plan has been canceled, and the college tuition has been paid one last time. So what’s next? Newly minted empty nesters, having poured a couple hundred thousand dollars into raising each child, respond to their financial liberation in one of two ways. Some start saving more for their golden years. The others keep spending at that elevated level – but this time on themselves. This personal decision, made at the critical juncture in the pre-retirement years, will have consequences for retirement – save more and things could turn out pretty well, or keep spending and jeopardize financial security in old age. In the aggregate, at least some older households…

What a drag. One in four Americans said they can’t afford to take a vacation this summer. The 3.8 percent unemployment rate is at its lowest since 2000, when the high-technology industry was going gangbusters. Despite the economy’s current strength, the cost of a vacation puts it out of reach for millions of people. The average family of four spends about $4,000 on vacation, Bankrate said. Air fares don’t seem to be the issue – they are lower now than they were five years ago. But families living on a limited budget are more likely to drive, and the price of gasoline has shot up 25 percent over the past year, to around $2.90 per gallon. Many people are shortchanging themselves on vacations,…

Medicare pays for the bulk of the medical care for Americans over 65, but a lot of their income is still eaten up by medical expenses. The list of expenses is long. The lion’s share goes toward various insurance premiums – for Medicare Part B coverage, Part D prescription drug coverage, and supplemental insurance, whether Medigap, a Medicare Advantage plan, or employer health insurance for retirees. The remaining costs, for copayments and deductibles, are also significant. These out-of-pocket costs, when added together, averaged about $4,300 annually per person, finds a new study by researchers Melissa McInerney, Matthew Rutledge, and Sara Ellen King of the Center for Retirement Research. Out-of-pocket costs consume a third of the amount that retirees receive from Socia…

When young people are dissatisfied with a job or feel it intrudes too much on their personal lives, they find a new one. Not so easy for older workers. Their decision is complicated partly because they have fewer employment options as they age, but also because they must ask themselves whether or not it’s time to retire. A study out of the University of Michigan’s Retirement Research Center found that people in their 50s, 60s, and 70s often choose to retire when long hours, inflexible schedules, and work responsibilities don’t allow them to do what’s required to help a family member or a sick spouse or to enjoy more leisure time. Many things are constantly pushing and pulling older workers toward…

This cartoon, by Vancouver Sun cartoonist Graham Harrop, hits on one of retirees’ biggest mysteries: their future health. The elderly live with the anxiety of getting a grave illness that isn’t easy to fix, such as cancer or a stroke.  And despite having Medicare insurance, they also have to worry how much it would cost them and whether they would run through all of their savings. They’re right to worry. Health care costs increase as people age from their 50s into their 60s and 70s. About one in five baby boomers between 55 and 64 pays extraordinary out-of-pocket medical expenses in any given year. But by 75, the odds increase to one in four, according to a report summarizing the reasons that…

It’s usually not talent or street smarts or brains that make people wealthy and comfortable. It’s the luck of having rich parents. But there is another way to get there, one that is within reach: becoming the first generation in the family to earn a college degree. A new study by the Federal Reserve Bank of St. Louis, using the latest federal data on household finances, measures the impact of having that degree – or not having one – on wealth and income. Although the ranks of college-educated Americans have grown over the past quarter century, people lacking a degree still make up a substantial majority – two out of three Americans. ……

People who have a college education are known to live longer. But could a sunny disposition also help? Yes, say two researchers, who found that the most optimistic people – levels 4 and 5 on a 5-point optimism scale – live longer than the pessimists. But this effect works both ways. The biggest declines in optimism have occurred among older generations of Americans who didn’t complete high school at a time when this was far more common. It’s no coincidence, their study concluded, that the white Americans in this less-educated group in particular are also “driving premature mortality trends today.” The finding adds new perspective to a 2015 study that rocked the economics profession. Two Princeton professors found that, despite improving life expectancy…

Education is the fastest ticket to a higher income, more opportunities, and a better quality of life. But four-year college is often a tough road for the pioneering first in their families to attend. They have at least two big disadvantages – apart from the well-known financial one.  Unlike the teenagers of the highly educated professionals who usually take for granted that their children will go to college, first-generation students might not have the benefit of high expectations at home. College is outside their comfort zone, which creates psychological barriers to attending and succeeding. A second disadvantage is that they aren’t always going to learn, through a sort of parental osmosis, to cope with higher education’s mores and attitudes or…