Squared Away Blog

West Virginia teachers started the wave of strikes over pay. Photo courtesy of Janet Bass, American Federation of Teachers Teachers’ strikes and walkouts over inadequate pay – in Arizona, Kentucky, Louisiana, North Carolina, Oklahoma, and West Virginia – are making news this spring. In Oklahoma, half the people who’ve left teaching recently said pay was their top reason for moving on. A wave of reductions in another significant form of compensation – pensions – also appear to be making state and local governments a less appealing place to work, according to researchers Laura Quinby, Geoffrey Sanzenbacher, and Jean-Pierre Aubry at the Center for Retirement Research, which publishes this blog. Pensions have traditionally been the great equalizer for governments trying to recruit…

Seven years ago this month, this personal finance and retirement blog debuted. How things have changed. For one thing, back in 2011, a lot more people were reading blogs and newspapers on their clunky desktop computers. In recognition of the now-ubiquitous smart phone – more accurately, a computer that happens to have a phone – we just redesigned how Squared Away looks on phones to enlarge the type and make the articles easier to read.  Our older readers will appreciate this update. Year 7 is also an opportunity to restate the blog’s mission, which, frankly, was not fully refined in the early years.  In some ways, our mission has not changed: we continue to emphasize retirement security and personal finance, with a…

For the sheer simplicity they bring to 401(k) investment decisions, retirement experts have been big fans of target date funds for years. Now, their popularity is soaring with the people who really count: employees. Last year, 401(k) participants poured a record $70 billion into target date funds (TDFs), an investment option that automatically shifts the asset allocation in the portfolio to reduce risk as employees approach a designated retirement date. TDFs have become the first choice for people who, rather than go it alone and pick their own mutual funds, like having their employer’s mutual fund manager do it. According to a new report by Morningstar, the Chicago research firm, the new money flowing in has averaged $66 billion annually…

Just as the wealth and income gap between the well-to-do and working people is growing, so, too is retirement inequality. Researchers increasingly want to know what’s behind this phenomenon. They’ve uncovered reasons ranging from low-income workers’ greater difficulty saving to the well-to-do’s longer life spans – which means they’ll get more out of their Social Security benefits. Having a low income doesn’t necessarily mean a retiree can’t live comfortably. What matters is how much of their earnings they will be able to replace with Social Security and any savings. Even by this standard, lower-income workers come up short: 56 percent are at risk of having a lower standard of living when they retire. The decline is slightly less for middle-income workers –…

Sky-high city rent, college loan payments, and the low-paying days of an early career are a bad combination for today’s Millennial. Liz Patterson Liz Patterson has solved all that.  The carpenter built herself a 96-square-foot house on top of a flatbed truck for less than $7,000 in Manitou Springs, Colorado, a hip neighborhood near Colorado Springs. The house “represents my monetary freedom – it’s the whole reason I did it,” the 27-year-old said. Tiny houses, which average 500 square feet, are only about 1 percent of U.S. home sales. But builders say that sales continue to grow as Generation-X buys them as Airbnb rental properties, and baby boomers park their “granny pods” in an adult child’s backyard. Patterson’s house befor…

Karen Dobson Kay Dobson is 68, and it’s time to retire from her job as the jack of all trades at the Augusta Circle Elementary School in Greenville, South Carolina. But she isn’t quite as ready for her June retirement as she could’ve been. She recently learned that an admitted unfamiliarity with Social Security’s arcane rules cost her about $31,000 for two years of foregone spousal benefits based on her husband’s earnings. “I had not the vaguest idea that I would be eligible for that,” she said. Dobson is hardly the first person to make a painful mistake like this. People have all kinds of misconceptions about Social Security, or they lack a basic understanding of how it works – that…

Diane Taylor Betty Taylor is 74 and retired from a job she held for more than a decade filling Spiegel catalog orders and packing them up for shipping – she left in 1984. Diane Taylor, 70, was a packer and then a keypunch operator there between 1982 and 1995. But the sisters, who live together in their late mother’s house on Chicago’s Southwest Side, couldn’t track down anyone who could confirm that their low-paying jobs entitled them to Spiegel pensions. This is more common than one might think. When a single employer or union has continued to maintain its pension plan over several decades, retiring workers know where to go to sign up for their benefits. But the sisters’ pensions…

Caregiver in a nursing home can be grueling work, but my aunt loved it. In one of life’s cruel ironies, she died soon after retiring to take care of her husband, who is developing dementia. The great responsibility for his care fell suddenly on his children and grandchildren, and they’re struggling with it. I texted this video to a couple of my uncle’s daughters because it provides invaluable information and insight into the myriad causes of Alzheimer’s and the unique way its symptoms manifest in each individual. It also explains why diagnosis by a physician is critical – turns out, some people appear to have dementia, but the cause of their cognitive decline isn’t Alzheimer’s and may be reversible. T…

When once-simple financial tasks become difficult or confusing, it can be the canary in the coal mine signaling that an elderly person is developing dementia. Financial problems will soon follow once people with cognitive impairment start miscalculating and missing payments, forgetting and misplacing accounts, or falling victim to fraud. But some good news has come out of a new study of Medicare recipients: the vast majority of the 5.5 million people over 65 with established dementia – usually, though not, always Alzheimer’s disease – are receiving help from family and other caregivers with balancing their checkbooks, depositing and withdrawing money, and conducting transactions. Even better, they are actually benefitting from it. The seniors who receive assistance are more likely to be ab…

Different people, different strategies. Myra Hindus and Jewell Jackson Myra Hindus of Boston, semi-retired at 68, had her financial adviser estimate the 401(k) withdrawals necessary to support her $4,500 monthly budget, which the adviser also prescribed. But Hindus isn’t fully at ease about her finances, despite the professional advice, a paid-off mortgage, and a good bit more savings than most people have. “It’s a bunch of guesswork,” said the former diversity administrator and consultant to major universities who hedges her bets by teaching college social work courses. What overwhelms her are the many unknowns that will determine whether her money lasts as long as she does. What if her adviser is wrong? Or what if she lives well into her…

The 1980s featured bankrupt Texas savings and loans. Then, in the mid-2000s, Countrywide failed to clearly disclose to customers the spike in their subprime mortgage payments in year 3. In 2016, 5 million customers learned about their fabricated Wells Fargo accounts. And last year, Equifax breached 140 million customers’ privacy. No wonder people are flocking to the friendly credit union in their church, labor union or workplace. The widespread fraud reports making headlines with regularity have fed a perception that “fraud happens in the banking world and a lot of it goes unpunished,” said Mike Schenk, senior economist for the Credit Union National Association (CUNA). “It’s not just Countrywide as an abstract concept. It’s that Countrywide put people into thes…

It’s a simple concept. Deposit retirees’ Social Security checks right before their big-ticket bills come, especially rent. The U.S. Social Security Administration’s current schedule for depositing pension checks in bank accounts is based on each retiree’s birth date– it can be the second, third, or fourth Wednesday of each month. The problem is that cash-strapped, low-income seniors receiving the earlier checks, on the second or third Wednesdays, can fall into a common behavioral trap: they spend the money soon after it comes in and then can’t cover the rent, mortgages or credit cards due at the beginning of the following month. According to a clever new study, people who get these early monthly checks are at greater risk of resorting…