Squared Away Blog

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…

For decades, the Medicaid program has subsidized health care for the poor, including retirees. Yet, until recently, it largely excluded most working-age adults without disabilities due to a strict monthly income limit. All that changed in the 32 states and the District of Columbia that accepted the Affordable Care Act’s (ACA) option to expand their Medicaid coverage to low-income working people. In 2010, the ACA increased Medicaid’s income limits for people to qualify for the insurance. Today, working baby boomers, as well as younger workers, can qualify if their income is below 138% of federal poverty levels – or $1,396 per month for a single person and $1,892 for couples. This joint federal-state program now completely or partially insures about…

Kate McKinnon has made a name as a comedienne with her wild and weird humor on “Saturday Night Live.” But she plays straight man to the kids she interviews about money. This video, produced by the best-selling personal finance author, Beth Kobliner, is an effort to have some fun while improving financial literacy – an effort that seems aimed more at adults than children. Justine, Ricky, and Jillian are the sugar that makes Kobliner’s sober advice about saving, jobs, debt, and credit cards more palatable – and this strategy just might be effective. Watch for yourself…

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 –…