Squared Away Blog

For most of the 20th century, life expectancy was on the rise. Yet older Americans were retiring at younger and younger ages. That changed in the 1990s. Life expectancy continued to rise, but retirement ages started increasing too. Many significant developments are behind the dramatic shift in retirement habits, including the decline of private-sector pensions, changing attitudes about working women, and bigger financial incentives from Social Security for people who remain in the labor force in order to get a larger monthly check when they finally retire. Given all of these changes, Urban Institute researchers wondered whether the dramatic longevity gains experienced by the people who make it to their 50s and 60s could be counted as another reason for…

For baby boomers who thought they were on the path to retirement, the road is shifting beneath their feet. Danielle Harrison, a financial planner in Columbia, Missouri, sees a raft of problems stemming from the COVID-19-induced economic slowdown. Many older workers getting close to retirement age are taking big hits to nest eggs that were already too small. Some boomers who lacked pensions and were behind on saving tried in recent years to make up for lost time with a riskier portfolio in the rising stock market – now they’re experiencing the downside of that risk. Others are scrambling to pay expenses or maintain debt payments as their income drops, altering their financial security now and changing their calculations for…

Moves by state governments to improve access to food stamps have been very effective in increasing the number of retirees and people with disabilities who get the benefits, a new study finds. The states, given a wide berth to administer the federal Supplemental Nutrition Assistance Program, or SNAP, as they see fit, have responded in recent decades by easing access to food stamps for their low-income residents through a variety of policies. Many states have loosened the eligibility requirements by, for example, increasing the limits on the dollar amount of assets applicants are permitted to have or by automatically qualifying them when they receive other means-tested benefits. A second set of policies aim to reduce so-called transaction costs, which broadly…

It might be the most consequential issue baby boomers will deal with when they retire: did I save enough? Vanguard’s free online calculator will estimate that for you, using the same sophisticated technique financial advisers charge hundreds of dollars to provide. The user-friendly calculator uses 100,000 of what are called Monte Carlo simulations of potential future returns to the financial markets to arrive at the probability that a household’s invested savings will last through the end of retirement. To get to this number, older workers enter their information into the calculator – 401(k) account balance, asset allocation, estimated years in retirement, and annual withdrawals – by moving around a sliding scale for each input. The financial industry recommends aiming for a…

When Sanofi froze its defined benefit pension plan last year, the top brass wanted to make sure its 401(k) was seen as a worthy replacement by the company’s 24,000 U.S. employees and retirees. Sanofi has succeeded, judging by Plan Sponsor magazine’s designation of the U.S. division of the French pharmaceutical giant as 2013 “Plan Sponsor of the Year.” In corporate America, 401(k) plans are now the norm: in 2012, only 11 of Fortune magazine’s 100 largest companies still offered a traditional defined benefit pension, according to the consulting firm Towers Watson. But Sanofi U.S. had strong motivation for designing a 401(k) that is generous compared with typical 401(k)s. The company has “highly technical, highly specialized, highly skilled [employees] that w…

If the difference in men and women’s pay is a gap, then the wealth difference can only be described as a chasm. Women earn 80 cents for each dollar a man earns. But a woman has 32 cents of net worth to a man’s dollar. One byproduct of the #MeToo movement is the fresh light it has put on the age-old women’s issues of unequal professional status and pay.  But Elena Chavez Quezada, senior director of the San Francisco Foundation, explains in this video that wealth – home equity and financial assets minus debts – provides a more accurate picture of financial stability over the long-term. A 2018 report found that net worth for older women, adjusted for inflation, has…

Now that COVID is fading, researchers looking back on the financial assistance passed by Congress during the pandemic are concluding that it helped millions of Americans get through a time of unprecedented distress.   That the assistance would be adequate was not obvious in the midst of the economic turmoil in 2020 as COVID unfolded. But a year into the pandemic, Americans were feeling better off after the infusions of cash from federal relief checks and more generous benefits for laid-off workers that included an extra $600 per month and – for people with assets – soaring house and stock prices. When working-age adults were asked in 2021 how they perceived their finances, 36 percent said they would have troub…

Manuel Carvallo immigrated from Mexico at age 40 and became a U.S. citizen at 51.  The Georgia pension consultant just reached another milestone, accumulating the 10 years of U.S. work experience required to receive a small Social Security pension when he retires. Millions of immigrants from around the world who work here illegally could get the same opportunity as Carvallo under President Obama’s executive actions on immigration, which propose to give many of them temporary legal work papers and Social Security numbers.  Great uncertainty remains about where U.S. immigration policy is heading as Congress actively seeks to reverse the president’s administrative actions What is clear is that when undocumented immigrants – farm workers, hotel workers, and household and restaurant staff…

For most retirees, figuring out how much money to withdraw from savings every year is a difficult-to-impossible math problem. But the issue goes much deeper: fears about what the future might bring make this decision overwhelming. Extreme caution is a popular solution. A 2009 study estimated that by the time middle-income retirees are in their 80s, they still had not touched about three-fourths of their savings, and 2016 research found that retirees with substantial assets are the most reluctant spenders. Vanguard recently reported that retirees with very modest savings turn around and reinvest a third of the money they’re required to withdraw under IRS rules after age 70½. People saved all of their lives to make sure they will enjoy…

The Great Recession is nearly gone from our collective memory. But for the people who lost a house to foreclosure in the subprime mortgage scam, the recession is still affecting their finances. The house is typically a worker’s largest asset. But 15 years after the foreclosure wave, the homeownership rate for the victims of foreclosure remains well below the rate for people who were in a similar financial position at the time but managed to hold on to their properties. And although credit scores have improved for the 1.8 million homeowners who were foreclosed on annually between 2007 and 2013, they remain suppressed, the Federal Reserve Bank of New York reports. Their typical credit score is 700, compared with t…

Nursing homes are usually at the bottom of people’s list of places for their parents. A workable and little-known alternative is available in many states: adult foster care. This PBS video about Oregon’s program features a suburban Portland woman, Carmel Durano, who provides 24-hour care in her home for five elderly people, including her mother. Durano has been a good solution for Steve Larrence’s 99-year-old mother. He feels comfortable with Durano and lives in the same neighborhood, so he can walk over anytime to talk to his mother.  “You don’t feel like you’re in an institution. You feel like you’re living with a family,” Larrence said in the video. Durano is part of a network of more than 1,500…

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…