Squared Away Blog

Medicaid serves millions of low-income Americans, many of them elderly. Federal spending on this program now approaches the dollars spent on Medicare, the primary health care program covering virtually all Americans over 65.  Many people confuse the two programs, or cast Medicaid as a program strictly for the poor.  Many are unaware of the financial support that it provides to seniors. With major changes to Medicaid now being debated, Squared Away interviewed Diane Rowland, executive vice president of the Henry J. Kaiser Family Foundation, to learn just what Medicaid does. Q. Describe Medicaid’s broad mission and how older Americans fit into that mission. A. Medicaid’s basic mission has been to provide support from the federal government to the states to…

The Internet offers many free calculators to baby boomers wanting to get a better handle on whether their retirement finances are on track. The operative words here are “on track,” because each calculator has strengths and weaknesses.  Calculators aren’t capable of providing a bullet-proof analysis of the complex factors and future unknowns that will determine whether someone has done the planning and saving required to ensure a financially secure retirement. With that caveat, Squared Away found three calculators, listed below, that do a good job. They met our criteria of being reliable, free, and easy to use.  Many other calculators were quickly eliminated, because they were indecipherable or created issues on the first try. Most important, each calculator selected covered…

Nearly 8 trillion dollars sits in Individual Retirement Accounts, or IRAs. This is nearly half of all the value held in the U.S. retirement system, which also includes employer pension funds and 401(k)s. A big reason IRAs were created in 1974 under the Employer Retirement Income Security Act (ERISA) was to give individuals not covered by retirement plans at work an opportunity to save in their own tax-deferred accounts. So, are IRAs helping these workers? IRAs “have drifted very far from their original intent” of helping those who need them most, researchers for the Center for Retirement Research conclude in a new study. Who is eligible to receive tax benefits for saving in an IRA has morphed over the years…

Many of you are enjoying a long weekend or taking the entire week off. Enjoy your vacations and drive safely. As the summer kicks into high gear, we’ll continue blogging twice a week about retirement and related personal financial issues…

Investors will probably see good news in Morningstar Inc.’s annual report showing that the fees charged by actively managed mutual funds continue to come down. The truth is that focusing on fees alone misses the point. What matters is a fund’s after-fee return. There are always fund managers who excel at picking stocks and can deliver strong after-fee returns to investors year after year, justifying the high fees required to pay them. The early years of Fidelity’s Magellan fund is the classic example. The trick is finding that clever manager, which requires a combination of luck and the skill and inclination to compare numerous investment options. One thing making this task a little easier is the mutual fund industry practic…

Millennials’ reliance on their parents, retirement finances, and long-term care – Squared Away readers had some serious topics on their minds during the first half of the year. Here are the 10 most popular blogs, ranked by the number of page views each received between January and June: Retiree Benefits: Tale of 2 Cities (and States) Get Dental Work Before You Retire Long-Term Care Insurance Goes Uptown Long-Term Care on a Boxed Wine Budget The Benefits of Late-Career Job Changes Retirees Don’t Touch Home Equity People Lack Emergency Funds, Tap 401(k)s Managing Money with Cognitive Decline Why Parents’ Home is the Millennial Crib Our Stubborn State of Financial Illiteracy ……

The first study known to look at changes over several decades in lifetime earnings for the nation’s workers shows a dramatic trend: women are up and men are down. The oldest people studied, mostly men, began working in the 1950s, when the post-war U.S. economy was going full throttle, and they started retiring in the 1980s when the industrial economy was only in the early stages of a protracted decline. The youngest workers studied are “middle” baby boomers, who came of age during the twin 1980s recessions in heavy industry and experienced the rise of the service economy and two high-tech booms and busts. Over this time period, men’s earnings went through two distinct phases.  In the first phase –…

Credit card companies usually set small-dollar minimum payments, so there’s really no excuse for incurring fees for late card payments. Yet many consumers fail to pay on time. In a new study, British researchers found a no-brainer solution that is highly effective: setting up automatic payments of our credit cards. The researchers started out with a different premise: that customers might learn, over time, to prevent maddening late fees after having to pay them numerous times. The researchers roundly rejected this after following nearly 250,000 U.K. credit card holders over two years.  When it comes to late fees, we do not learn from our mistakes. What they noticed, however, was a clear distinction between card holders who incur late fees…

My husband has taught high school biology for 30 years in Boston and works hard for his students. But he’s nearly 64 and it’s time to think about retiring. Can we afford it? When we retire, will we eventually run through our savings? Is retirement scary – or what? Questions like these are also probably haunting millions of baby boomers in the middle of the night. One out of three boomers in a recent Transamerica survey said they are not confident they will have enough income to retire “comfortably” and another third concede that they are only “somewhat confident.” To find the answer for ourselves, my husband and I hired a financial adviser. It was the best thing we could’ve done. T…

Social Security Administration poster, 1956 Many women are fuzzy on how Social Security benefits for widows work and even more unclear about the program’s spousal benefits. I know two of these women. Their situations nicely illustrate how this federal program promotes the well-being of older women and families. One is my divorced aunt. She was surprised to learn, after my uncle died a few years ago, that her widow’s – or survivor’s – benefit, based on his decades of work as a housing developer, would be double the spousal benefit she’d received while he was alive. Divorced spouses are eligible for the same spousal and survivor’s benefits as still-married spouses, though only if the marriage lasted more than 10 years…

Now comes the toughest part of borrowing money for college: paying it back. There is much for this year’s crop of graduates to learn.  For example, the federal government gives you a reprieve after graduation, usually six months, before requiring you to start repaying your debts. But did you know that interest builds up during this “grace period”?  Starting payments right away reduces how much you’ll have to pay back. Making repayment mistakes or not having a plan can also be very costly.  Click here for some tips to avoid these mistakes. Here’s another issue: women borrow slightly more money for undergraduate degrees than do men but earn less after college and seem to have more difficulty paying back their…

In the 19th and early 20th centuries, it was not unusual for older Americans to live with their adult children and grandchildren. But more seniors could afford to live on their own after passage of Social Security and then Medicare. By the 1990s, fewer than 10 percent of people over age 65 lived with relatives, usually offspring.  This number has crept back up to around 12 percent in recent years, according to an analysis by the Center for Retirement Research. Economic disadvantage is the common thread among older people living in these multigenerational households, a new study finds. This held true whether the seniors moved in with their adult children and grandchildren or the offspring moved into their parents’ homes…