The Secret to Longer Life: Keep Working

If having an adequate income in retirement won’t persuade you to delay that retirement date by a year or two, try this argument: you’ll live longer. A new study in the Journal of Epidemiology and Community Health found strong evidence that older workers who retire even one year later have lower mortality rates.  This held true for both healthy and unhealthy people. The researchers at Oregon State and Colorado State used a survey of older workers to follow some 3,000 people who were employed in 1992 but had retired by 2010.  Since health drives mortality and is a factor in deciding when to retire, they separated their research subjects into two groups – healthy and unhealthy – to see if…

May 17, 2016

Contingent Labor Force Growing Fast

Most workers quickly realize that the best solution to low earnings in a job with scant or non-existent benefits is to move on to something better. But this is increasingly difficult to pull off, because technology and other powerful forces are reshaping the 21st century economy – and degrading the quality of the jobs that are available.  As companies seek to cut labor costs, technologies like scheduling software for retail and fast-food workers and platforms like Uber and Task Rabbit are making it easier to do. The result has been a rapidly growing contingent labor force of temp-agency workers, freelancers, independent contractors, workers for contract companies, and on-call workers with unpredictable schedules, according to a recent study by prominent Harvard…

May 12, 2016

5 Ways Millennials Mess Up With Money

The harsh reality is that you aren’t earning as much money as you think you are, and you don’t have as much to spend as you think you do – so it’s easy to let spending get out of control. Andrea Woroch, only 34 years old herself, delivers some tough love to those who’ve already developed poor spending habits. A personal finance expert for the Millennial generation, Woroch said a perilous time is between the cash-strapped period right after college and the time when the steady, but modest, paychecks start flowing. Early on, she explained, the attitude was “Okay, let me go to happy hour on this day because I can get $1 tacos and a beer. Now it’s okay to…

May 10, 2016

To Escape Stress, Some Workers Retire

Call it the “fed-up factor” – the uncomfortable circumstances at work that spur some older people to retire, sometimes prematurely. Squared Away’s readers recently shared their personal experiences in comments posted to a blog post about three job characteristics, identified by researchers, that are linked to earlier retirements: stress, inflexibility, and increasing demands. Working in the healthcare field has had unique stresses – at high levels – for one reader, Elin Zander, a dietician. Stress “is experienced by clinicians trying to provide quality care in an ever more difficult environment,” she said. “That is why I will retire as soon as I can afford to.” Paul Brustowicz and his wife both retired to remove themselves from uncomfortable situations – her…

May 5, 2016

Housing, Health Are 1/2 of Elderly’s Costs

How will your spending change once you retire? Will you be able to afford your needs? Will healthcare drain your budget? The U.S. Bureau of Labor Statistics (BLS) provides some clues in its data on the spending patterns of older Americans. The pie charts below show the percentage of total household budgets in 2014 that went to everything from housing to entertainment for two older age groups. The two age groups selected highlight how spending changes between one’s final years in the labor force (ages 55-64) and retirement (the over-75 group). (Note: a household’s age is determined by the age of the individual who responded to the survey.) The pie charts tell part of the story. Here’s what the BLS…

May 3, 2016

Stress is One Reason People Retire

Only about half of U.S. workers in their late 50s can be expected to remain employed at age 63, and less than a third make it past 65. New research looks below the surface of these broad trends to reveal the role that the specific characteristics of individual occupations play in whether baby boomers can work longer. It’s very common for people unexpectedly hit with health problems or blue-collar workers facing up to their physical limitations to retire earlier. On the other hand, older people in some jobs have good odds of working longer. A new study by researchers from the University of Michigan and the Rand Corporation uncovered three characteristics that promote working longer that exist in a variety…

April 28, 2016

Delaying Motherhood Boosts Earnings

Economists have landed on two primary reasons for why women working full-time earn less than their male co-workers. First, their research detects an element of discrimination. The second reason stems from motherhood, which can make it extremely difficult to simultaneously complete an education or get a firm footing in a career. But America is changing. Over the past half-century, the typical age at which women have their first baby has risen markedly, from 20 to 25. This societal shift toward later motherhood has, in turn, dramatically improved women’s financial prospects, concluded a study featured in a book about the financial impact of changing employment, family and health trends. University of Virginia economist Amalia Miller found that each one-year delay in…

April 26, 2016

Game of Loans: Refinancing Student Debt

Brendan Coughlin, who runs the student loan refinancing unit for a major bank, is very upfront about this: some young adults should not refinance their loans. One example is a graduate new to the labor force who doesn’t feel stable yet in his or her job. Refinancing a federal student loan with a high interest rate can make sense and saves money. But one reason not to refinance federal loans is that they have a major advantage over loans refinanced by private lenders: flexible repayment options for those who might have difficulty meeting their monthly payments later. Another reason not to refinance is that the government forgives the debt after five or 10 years for certain types of teachers and…

April 21, 2016

Seeking Roommate to Share Bills

Maria Machado estimates that women over 50 make up about three out of four of the Dallasites seeking to cut their living expenses either by renting out a room in their home or by renting from a homeowner. Shared housing often isn’t their first choice. “We like our independence,” said Machado, head of the Shared Housing Center, a non-profit roommate matching service in Dallas. But “house rich and money poor” older women will turn to house-sharing when they become widowed or if Social Security is their sole source of retirement income, she said. Companionship is another benefit of match-ups, whether with another senior or a younger adult. The Shared Housing Center is part of a national network of programs matching…

April 19, 2016

Why Most Elderly Pay No Federal Tax

A March blog post pointing out that a large majority of America’s older population pay no federal income tax seemed to surprise some readers – particularly retirees who must send checks to the IRS at this time of year. “[M]y annual tax liability is and will continue to be greater than when I was employed,” said one such retiree. Readers’ comments are always welcome, and this time they’ve thrown a spotlight on a shortcoming of the article.  It did not fully explore why most retirees – roughly two-thirds of 70 year olds – pay no federal income tax. According to a Tax Policy Center report, “Why Some Tax Units Pay No Income Tax,” tax filers over age 65 are t…

April 14, 2016

White-Collar Jobs Age-Sensitive Too

It’s widely recognized that blue-collar workers retire relatively early, when their bodies start wearing out. But the assumption has been that people in less physically demanding white-collar jobs can carry on. However, that does not hold true for all white-collar occupations, according to a newly released study by the Center for Retirement Research, which supports this blog. This finding is especially relevant amid renewed discussions about again increasing the age when workers can claim their full Social Security benefits. This would effectively reduce everyone’s benefits by about 7 percent for each year the age is raised.  Benefits are reduced either because individuals must wait longer to claim their full monthly benefit (which means receiving the benefit for a shorter period…

April 12, 2016

Our Blind Spots Cut Retirement Savings

Our personal biases can play havoc with how we handle our finances. Two such biases have long been suspected as obstacles to saving for retirement. The first is a tendency to procrastinate on decisions that may benefit an individual in the long run, but also involve short-term costs, like saving for retirement – economists call this “present bias.” The second bias is a failure to perceive the power of compounding investment returns and how this can build wealth over decades of saving. But the impact of these biases on how much people actually save wasn’t really understood – until now.  A new study by a team of economists from Stanford University, the University of Minnesota, the London School of Economics,…

April 7, 2016