Squared Away Blog

It’s now a given that more people in their 60s and 70s are choosing to keep working. But a related trend rumbling beneath the surface isn’t so well-known: the share of working older people with full-time jobs has increased sharply – to almost 61 percent in 2016 from 40 percent in 1995 – as part-time work has become less popular. The majority of older Americans are retired. But among those who do work, the move from part-time to full-time is “a major shift” in work schedules, concluded the Brookings Institution’s Barry Bosworth and Gary Burtless and George Washington University’s Ken Zhang in a report last year.  This is one aspect of the broader trend of rising labor force participation for…

Hercules sculpture, Florence, Italy. Medical bills are leaving “a lasting imprint on families’ balance sheets,” JP Morgan Chase concludes from its recent analysis of the anonymous checking and credit card account activity of some 250,000 bank customers. With little available cash on hand, 53 percent of these families prepare to pay large, one-time medical expenses by waiting for an uptick in their income. Nevertheless, a year after the bill is paid, they are still struggling to patch the hole blown in their household budgets, according to the report, “Coping with Costs: Big Data on Expense Volatility and Medical Payments.” The 2013-2015 account data show that family incomes tend to be 4 percent higher, on average, in the month a medica…

The magic number is 35. That’s how many years of earnings the U.S. Social Security Administration (SSA) uses to calculate every worker’s pension benefit.  But 35 years can be a tall order for the many boomer women who took time off or cut back on their hours to raise their children.  Nearly half of 62-year-old working women today didn’t make any money for at least one year in their earnings history on record with SSA. But this also means they have more to gain financially than men from working longer, because each additional year of work substitutes for a zero- or low-earning year during motherhood in the benefit calculation, according to research by Matt Rutledge and John Lindner at t…

A degree from a premier college can vault a teenager from a low-income family to the height of economic success as an adult. To date, 15 colleges have signed on to work with Levine, who initially created the calculator for applicants to Wellesley College, where he is an economics professor. But disadvantaged students face a multitude of barriers to attending the nation’s top colleges, from getting the grades required to withstand stiff competition for acceptance to the absence of a degreed family member who can steer a child, niece or grandson through the process. Phillip Levine is breaking down one barrier: the well-founded fear among low-income and even middle-class families that an elite liberal arts college is out of t…

  “No one will ever pay you what you’re worth,” Casey Brown says in the Ted video above. An employee’s value is also highest when unemployment is as low as it is now – 4.4 percent in April – and employers are scrambling to fill jobs. Why would an employer pay more than it has to? With unions all but extinct, the burden falls on individuals to ensure they’re paid fairly or well.  Low unemployment provides workers with more leverage to get what we deserve. Unfortunately, many of us are not good at negotiating how much we earn.  Or we avoid it entirely, because we’re uncomfortable with talking money – especially women. Women “say things like, ‘I don’t like to sing…

If employers want to improve the poor retirement prognosis for a large chunk of American workers, there are some obvious things they could do. That’s the big takeaway in Morningstar Inc.’s new report on employers that offer 401(k) plans to their employees but don’t do what’s required to encourage them to save enough. During the early 2000s, automatic enrollment to increase participation in employer 401(k)s became all the rage, and the strategy has proved itself. Today, nearly 90 percent of automatically enrolled employees stay where they are put, while only about half of workers sign up to save when 401(k) enrollment is strictly voluntary. But the auto enrollment trend has stalled, and the crazy-quilt private-sector retirement system still has a…

The U.S. retirement system is built on people having a working knowledge of finance.  Yet financial literacy among a big chunk of Americans ranges from unimpressive to abysmal. This revelation was again confirmed in a survey that recently debuted by financial literacy guru Annamaria Lusardi, head of the Global Financial Literacy Excellence Center at George Washington University. In a 2011 survey, Lusardi had found that too many Americans were unable to answer three very simple financial questions. This new survey is more ambitious, though the results are no more promising. It asks 28 questions in eight areas: earning money, budgeting, saving, investing, borrowing, insuring, understanding risk, and information sources.  In the nationally representative survey, about one in four people got…

No longer simply a convenience for shoppers, the internet has come into its own: it is now an ingenious tool for squeezing money out of our wallets. This realization first struck me last year while helping my brother and his wife in Chicago with a flight to visit our mom in Orlando. The reason I was on the case is that he’s a bit of a technophobe. But it turned out that his technical skills weren’t the issue – the airline’s website was the issue. To flyers’ chagrin, most airlines are now a la carte operations, charging separate fees for everything from baggage to potato chips. This makes it difficult to compare fares online – one way we might wind…

The U.S. Social Security Administration states on its website that it “is no longer prohibited from recognizing same-sex marriages for the purpose of determining entitlement to or eligibility for benefits.” Numerous disadvantages faced historically by the nation’s 800,000 same-sex partners are falling away in the wake of the 2015 Supreme Court decision legalizing marriage – access to Social Security’s benefits for a worker’s same-sex spouse or widow is just one. The financial gains from legalized marriage should also increase substantially over time, as more gays and lesbians are drawn out of cohabitation and into married relationships. A new study, by Urban Institute researchers Karen E. Smith, Stephen Rose, and Damir Cosic, estimates that by 2065 same-sex couples 62 and older with low or mid-rang…

Is long-term care insurance a luxury product? Today, most policies covering home care and assisted living and nursing care facilities for the elderly are purchased by people with relatively high earnings, according to a new survey. Long-term care used to be insurance that the middle class would buy – either individually or through an employer, union, or affinity group – when it was more affordable. But the market, which has contracted dramatically, also seems to be shifting, according to retirement experts and new data from LifePlans, a long-term care research firm. In LifePlans’ survey, 82 percent of the people who purchased long-term care policies in 2015 earned more than $50,000 per year. In comparison, only half of the general older population…

Rob Peters during a trip East last summer. Rob Peters’ approach to retiring wasn’t much different from hitting the road in 1975 to help drive a college friend from New York to California. He didn’t really know where he was going. When he first laid eyes on California, he was captivated by its beauty, as well as the left-leaning politics absent in the conservative Long Island community he grew up in. But Peters, equipped only with an English degree from the State University of New York at Buffalo, bounced around for years among the various part-time and full-time counseling jobs available to him in his new paradise. Not until age 38, after earning a master’s degree in counseling and 13…

Most people see multicolored chaos in the chart below, which is a visual representation of the returns each year to various types of investments. Morningstar Inc.’s director of quantitative research, Timothy Strauts, sees something else: the need for a diverse portfolio. Strauts, like most investment professionals, knows the Callan Periodic Table of Investment Returns. It has been around for 20 years and was just updated with 2016’s returns. Here’s how to read it. A colored square is assigned to each type of stock- and bond-market index. For example, the Bloomberg Barclay’s Aggregate (Agg) bond index is bright green, and the Standard & Poor’s 500 stock index is khaki green – the boxes also give each index’s return for each year. ……