Squared Away Blog

This New Yorker cartoon by Trevor Spaulding is cute, but – spoiler alert – it’s not quite right. A company offering a 401(k) retirement savings plan to its workers is a good thing, but it’s no “favor,” noted my long-time editor Steve Sass, an economist with a hawk eye for inaccurate retirement information. Setting up and funding a 401(k) is a big expense for employers. But many think it is worthwhile, because 401(k)s – and, more so, employers’ matching contributions – help them attract and retain the sharpest, most productive, or most-skilled workers. Another employer calculation is that the income tax deduction employees get for saving, which costs the employer nothing, is especially valuable for those on the payroll who…

Appropriately, the most popular blogs over the past six months were about retirement, among both the young adults looking ahead to it and the later baby boomers heading toward it. Based on page view counts, here were the most-read blogs on Squared Away during the last six months of 2017: Retirement Calculators: 3 Good Options Why Many Retirees Choose Medigap Reverse Mortgage: Yes or No? Why Most Elderly Pay No Federal Tax The 411 on Roth vs Regular 401ks Medicare Advantage Shopping: 10 Rules ……

However you celebrate, we wish you a wonderful holiday season and coming new year – from the staff here at the Squared Away blog at Boston Colleg…

Lenny Higginbottom   A social worker hands Lenny Higginbottom, 52, the keys to a 378-square-foot apartment, the first home of his own after 24 years on the streets. “Try to fight the tears,” he says, gripping the keys during a video accompanying a story by Boston public radio (WBUR) reporter Lynn Jolicoeur. “Something I thought I’d never be able to do,” Higginbottom says. His past issues are not uncommon among the homeless: a father who died when he was six, depression, substance abuse, and a failed marriage. He had a Section 8 housing voucher but couldn’t find a landlord willing to rent to him due to minor criminal activity in his past. ……

This Donald Duck cartoon, funded by the U.S. government in 1943, urged Americans to pay their income taxes to support the war effort. Paying taxes was a patriotic act, to build up the inventory of war planes and battleships to defeat the Nazis – “sink the Axis!” the narrator bellows. Nobody liked paying taxes then, and they still don’t. Yet there was a growing awareness as the war played out in the 1940s that taxes – like saving your scrap metal – were necessary to advance the greater good. Things are different today. There doesn’t seem to be as much room in the public conversation for the benefits that federal taxes bestow, such as Social Security, Medicare, Medicaid (nursing home funding)…

Reflecting a lofty ambition to educate Delaware residents about financial management, state government officials put together some terrific videos. This is not high-level finance – the speakers tell stories about real people facing up to the dimensional challenges of money and retirement.  Viewers outside Delaware might find one of the 10 online Tedx talks valuable to them. Here are three: Javier Torrijos, assistant director of construction, Delaware Department of Transportation: His take on the immigrant experience in a nutshell: “The parents’ sacrifice equals the children’s future,” said Torrijos, who has two sons and whose own father left Columbia for a tough neighborhood in Brooklyn, New York, in 1964 so his children would have a shot at escaping poverty. Today’s immigrants…

As more baby boomers retire, Social Security’s impending financial shortfall will become more pressing. To restore solvency, Congress can either cut Social Security’s pension benefits or increase the payroll taxes deducted from workers’ pay. Both policies would impact how much is available for households to spend. Researchers at the Center for Retirement Research find that the benefit reductions would have an appreciably larger annual impact on retirees than would the higher taxes on workers. But the taxes would be spread over a longer time period. The new study looks at four specific policies, two that cut retirement benefits and two that raise taxes.  Each policy analyzed would equally benefit Social Security’s finances. Gauging their separate effects required using a model to…

In the 1960s, half of all wives were housewives, and their husbands often earned enough money to support a family. Today, these traditional families are a rarity and two incomes have become essential to surviving economically. A new joint report by the American Enterprise Institute and the Brookings Institution argues that poor and working-class families’ increasingly fragile family structure – despite the rise of dual-income spouses – often leaves them “doubly disadvantaged.” And lower marriage rates among poor and low-income couples help to explain why “America is increasingly divided by class,” write the authors, W. Bradford Wilcox, a professor and director of the National Marriage Project at the University of Virginia, and Wendy Wang, research director for the Institute for Family Studies. They explain…

You’re not going to like this, baby boomers. You have more debt than the two generations born during the early Depression and World War II, much of it compliments of the mortgage bubble that financed your larger, more expensive houses. The housing bubble popped in 2008, but the mortgage on the new house or perhaps a second mortgage continues to plague many. It should be no big surprise that a new study finds the “substantial” debts taken on specifically by those born in the late 1940s and early 1950s will gobble up more of their not-always plentiful retirement income. “The evidence clearly shows that many Americans” on the cusp of retiring “continue to be burdened by debt and to be financially vulnerable,”…

Federal Medicare spending will increase sharply as baby boomers, with their longer life spans than previous generations, sign up in droves. The Social Security Trust Fund also reports that its reserves will be depleted in 2034, requiring either benefit cuts or new revenues to replenish a program that keeps millions of older Americans either out of poverty or just above water. These two programs currently account for about 40 percent of the federal government’s $3.7 trillion budget. Most people agree that we need to deal with the financial shortfalls in Medicare and Social Security. And there is precedent. Remember the bipartisan 1983 reform that put Social Security on firmer footing by increasing the program’s revenues and gradually raising its Fu…

Thank you for continuing to read and support Squared Away! Our goal is to provide reliable information that is not influenced by the desire to sell a product or service, which we hope is a valuable service to you. And as a blog based at the Center for Retirement Research, we are particularly interested in covering what the current research (ours and many others’) can tell us about retirement, personal finance and the economic challenges that people face. What could be better than a big turkey in the oven and family and friends all around?  Happy Thanksgiving to all. To stay current on our blog, please join our free email list. You’ll receive just one email each week – with links to t…

In terms of popularity, reviewing Medicare plans during the open enrollment, going on now, ranks right up there with doing taxes. Retirees on Medicare view healthcare as their most burdensome expense.  But they are less likely to comparison shop for Medicare plans than for their groceries and gas, even though plan shopping would probably save more money. Deciding on a Medicare Advantage plan or deciding to switch to traditional Medicare, with or without a Medigap supplement, is “overwhelming, scary, and has consequences, so we put it off,” said Bart Astor, a spokesman for the insurer WellCare Health Plans, whose nationally representative survey quantified just how much retirees dread Medicare enrollment. Selecting one path over another also necessitates predicting the impossible:…