Squared Away Blog

Some of the workers and retirees around the country who count on having a government pension surely get nervous when they see headlines about the most troubled state and local plans – in places like Illinois, New Jersey, Connecticut, Chicago, and Detroit. A broader perspective on retirement benefits, however, shows that the results are more mixed.  A study by the Center for Retirement Research, which sponsors this blog, estimated long-term costs for pensions, retiree health benefits, and general debt service as a share of revenues for the 50 states, 178 counties, and 173 cities. The findings are summarized below: States: Many states’ combined costs – pensions, other post-employment benefits (OPEBS) such as health insurance, and payments on all government bonds…

Most of the 1,000 people who took the financial well-being quiz posted here last year felt content with their situations. Their well-being score averaged 16.4 out of 20 points possible on the quiz. This happy response completely conflicts with a statistically more reliable survey showing that three out of four Americans report feeling “financially stressed.” Our quiz makes no claim of representing the adult U.S. population and was taken by a hodgepodge of regular readers, Twitter followers and Facebook friends. So why are Squared Away loyalists so content with their finances? The blog is “attracting people who are in the action phase. I’m guessing they’re motivated and ready to move,” said Brad Klontz, a financial psychologist in Hawaii – …

Despite the normal cognitive challenges that people in their 70s and 80s inevitably face, most are sharp enough to be in charge of their financial affairs or oversee them. But the significant minority of seniors who do have trouble is explored in a new summary of the research by Anek Belbase and Geoffrey Sanzenbacher at the Center for Retirement Research, which supports this blog. One such group is people learning for the first time how to carry out financial tasks. Widows, not surprisingly, are often required to negotiate this financial learning curve, which gets steeper as a senior’s ability to process new information erodes. With guidance from a family member or professional, however, the novices can usually figure things out…

Having health insurance is no guarantee that medical care is affordable. Some families, despite being covered by the Affordable Care Act (ACA) or employer policies, say that high premiums and deductibles mean they can’t afford to see a doctor. This distinction – between having insurance and receiving care – will be crucial as Congress considers proposals for ACA’s replacement. One comprehensive 2003 study demonstrates how individual medical decisions change when they receive one longstanding, and what the researchers called “generous,” type of insurance: Medicare. Their study focused on changes in the use of the health care system – more so than improved health – by comparing people who’ve recently gone on Medicare with people a couple years away from turning…

It’s old news that the many baby boomers who did not get married and stay married are worse off financially than those who did. Unfortunately, the financial damage to one segment of this generation has broken new ground. Only 44 percent of “middle boomers” – those born in the late 1950s – have remained married to their original spouses, down from 52 percent of their parents’ generation. Middle boomers are also far more likely to have lived with partners without marrying, remained single all their lives, or even to have divorced twice. The heart of a study is determining which of middle boomers’ choices were most likely to have led to financial distress when they reached their pre-retirement years. About 11…

Maintaining a network of family, friends, or even golfing buddies is critical to cognitive and physical health in old age, research has shown. What wasn’t known is how work affects the social lives of older people. Does work foster social ties or limit the time one has to socialize? A new study by Eleonora Patacchini at Cornell University and Gary Engelhardt at Syracuse University finds that those who continue to work have larger social networks. They analyzed responses to the following question by more than 1,300 survey participants in the National Social Life, Health and Aging Project. The participants were ages 57 to 85 in 2005 and answered the following question then and again in 2010: “Most people discuss things…

When between 45 percent and 60 percent of Americans don’t have enough money for retirement, encouraging saving is a national priority. A related issue is preserving the funds once they’re set aside. A survey released last month by Transamerica indicates that workers frequently resort to hardship withdrawals and loans from their 401(k)s, because they lack the cash required in emergencies. The survey bolsters the argument made by some retirement experts and employers that until workers’ cash-flow problems are addressed, many will continue to view retirement funds as their best option in an emergency. More than one in four U.S. workers in the survey said they have taken premature withdrawals from their 401(k) or IRA retirement funds.  Catherine Collinson, president of…

The number of Americans over age 60 who are paying back federal or private student loans has reached a critical mass, quadrupling to 2.8 million over the past decade, a new report finds. These older borrowers owe $23,500, on average, and two-thirds of them also have mortgages and credit card bills at a time their medical expenses are typically increasing, according to the report issued this month by the Consumer Financial Protection Bureau (CFPB). Separately, nearly 40 percent of those with federal loans have defaulted on their payments. The response of many older student loan borrowers, the CFPB said, is to “skip necessary health care needs such as prescription medicines, doctor’s visits, and dental care because they could not afford…

Having dug ourselves out of the worst financial crisis since the Depression, the nation entered 2017 amid rising wages and record-low unemployment.  Yet three out of four adults report being “financially stressed.” And no wonder: half of the 2,000 adults in the December survey by the National Endowment for Financial Education (NEFE) said they are living paycheck to paycheck. Americans’ specific financial issues are routinely documented in this blog and run the gamut from cash-flow shortages to poor retirement prospects. The primary sources of financial stress identified in the NEFE survey were not enough savings and too much debt.  This was consistent with a second finding in which respondents said that solving these issues would also provide the most “financia…

Minimum-wage workers in 21 states and Washington D.C. will have larger paychecks this year. But it’s still extremely difficult to eke out a living on the minimum wage, as demonstrated by this video game. The game, “Spent,” was actually the topic of Squared Away’s very first blog in 2011 and is worth featuring again. The Urban Ministries of Durham in North Carolina designed Spent a few years ago so others could see how it feels to live on about $300 per week – the weekly income of those earning the federal minimum wage of $7.25 per hour but at the low-end in many states.  The game conveys the very real, sometimes impossible, financial choices faced by working men and women…

The Knapkes hiking last May in the Rocky Mountains. Heather and Tyson Knapke were like a lot of young couples starting out: they were in debt. One household expense on their credit cards loomed larger than all the others: at least $1,000 every month for groceries and dining out. Some weeks, the Denver-area couple could be found at their various favorite restaurants Thursday night straight through Sunday night. The food budget “was astronomical, and I had no idea,” Heather said. Their lives changed dramatically after realizing about 2 1/2 years ago that their finances were spinning out of control. How this couple transformed their debt-laden household into one that is free of credit card and college debts and has a…

The 10 articles that received the most attention from our readers last year are ranked below in the order of their total page views.  Retiree taxes and Medicare made up the top three: Why Most Elderly Pay No Federal Tax Medicare Advantage: Know the Pitfalls Federal Taxation Drops for Retirees Financial Fallout from Gray Divorce Stress is One Reason People Retire How Many Years Can You Do Your Job? ……