Squared Away Blog

Retirement experts and financial advisers maintain there is a right way and a wrong way to approach Social Security. For most people, the right way is to view waiting until your late 60s to sign up for benefits as the route to boosting your retirement income and protecting against out-living your savings.  People who delay will have a larger Social Security check to pay the bills that come due every single month for as long as they live. The wrong way is to make a decision based on fear – the fear of losing money if you don’t sign up soon after turning 62, the earliest age allowed under the program.  While you might feel that delaying means losing out,…

“The economy” was the top priority for the vast majority of American people in one poll last summer. Surely, what they were talking about was quality jobs and economic and financial security for themselves and their children. Or as my brother, a father of three and service manager at an auto dealership outside Chicago, put it in a recent text message, “No one can afford anything anymore.” This simple idea seemed to resound throughout the primaries and long presidential campaign. With the election over, I compiled the following wish list for working people based on what the polls and research studies reveal about what they are hoping for. Good jobs. The disruption created by the transition from an industrial to a…

Wyoming government has brought some 535 employees of the state’s executive, legislative and judicial branches into its retirement savings plan since July 2015 under a new policy of automatically enrolling each new hire. They are free to withdraw from the plan at any time, but only 15 of the 535 have done so – “and not a complaint from anybody,” said Polly Scott, who manages the savings plan and heads employee retirement education. This technique, borrowed from behavioral economics, addresses the inertia that prevents many people from ever signing up to save in their employer’s plan.  So why wait for them to join? Instead, Wyoming uses inertia to benefit state workers: when people are automatically enrolled, research shows, they tend…

We’ve passed a milestone: workers typically spend more than 10 percent of their incomes for their employer health coverage. A decade ago, they spent 6.5 percent on health costs. One reason for the rising cost burden is the growing prevalence of high-deductible insurance plans, and, within these plans, the deductibles themselves are increasing. Although premium hikes in employer plans have slowed in the past five years, they are also still going up. The nation’s aging work force could be another indirect pressure on costs. Workers’ incomes have also been going up, but growth remained sluggish over the past decade and “have not kept pace” with employer health costs, the Commonwealth Fund reported. Healthcare news in recent weeks has focused on t…

Young adulthood is the staging ground for financial success later in life, and today the stakes are higher than they’ve ever been.  Young adults are managing the burden of paying back student loans or feeling an urgency to save – and many are trying to do both. According to a study linking economics and psychology, what most strongly separates young adults who start out on the right foot from those already experiencing financial distress is whether they are conscientious or neurotic individuals. University of Illinois researchers followed more than 13,000 teenagers and young adults between 1994 and 2008 in the National Longitudinal Study of Adolescent to Adult Health.  The survey asked questions about both their psychology and finances.  The six…

In 2013, almost 40 percent of all households ages 55 and over had not paid off their mortgages, up from 32 percent in 2001. These borrowers were also carrying a lot more housing debt by 2013. During that time span, the housing boom first encouraged homeowners to borrow against their newfound home equity.  Then the 2008 bust hammered house prices from Miami to Seattle, reducing home equity and leaving many people holding relatively large mortgages. By 2013, these two factors had combined to exacerbate Americans’ poor preparation for retirement, according to a study by the Center for Retirement Research, which supports this blog. The researchers analyzed the impact of the bursting of the housing bubble on the National Retirement Risk…

When people are asked why they are stressed, money – or the lack of it – is often at the top of the list. Ask psychologists why this is so, and many would point to a deeper explanation: our parents. How and whether our parents talked about money, as well as the emotional tenor of these conversations – or silences – are critical to how we manage money as adults. Sonya Britt, a certified financial planner and associate professor at Kansas State University, explained how these family dynamics play out in a research summary written for financial planners, under a contract with the federal Consumer Financial Protection Bureau. Britt describes a two-way street between parent and child.  Parents signal their…

As the U.S. Department of Labor video above makes clear, the population of Latino workers is exploding. By 2024, nearly 33 million Latinos will be working in this country – they will have doubled their labor force share to 20 percent, from just 10 percent in 1995. Despite their expanding presence in the labor market, Latino-Americans face significant retirement challenges. Chief among them is that they don’t have the same access to traditional pensions and retirement savings plans that white Americans have, primarily because of where Latinos tend to work.  Two out of three Latino workers – many people prefer the term Hispanic – lack a 401(k)-style plan in their jobs, the U.S. Social Security Administration and other sources report…

This blog is for a part-time Macy’s saleswoman and immigrant whom I met in a hospital waiting room – she’d never heard of Social Security. It is also for a 22-year-old contingent worker I know who lacks steady employment and isn’t regularly accruing credit toward the Social Security pension he will probably need when he retires. And it is for a 62-year-old eager to claim his benefit right away, possibly short-changing his retirement. A substantial share of retirees would fall into poverty were it not for the Social Security program passed during the Great Depression.  It’s especially important for two groups of people to understand how Social Security calculates their pension benefits: young adults making employment decisions that will impact…

A decade ago, the nation’s Medicare enrollees had more than 1,800 different prescription drug plans to choose from. In the 2017 open enrollment that started on Oct. 15, that number dropped to just 746. News of higher Part D drug plan premiums and out-of-pocket costs in 2017, estimated in a new report by the Henry J. Kaiser Family Foundation, will not be welcome by the nation’s older population.  But Squared Away also wanted to know whether fewer plan options are good or bad for consumers. “It’s good in the sense [federal] efforts are bearing fruit in giving people options that are more distinct from each other than in the past,” said Juliette Cubanski, Kaiser’s associate director of Medicare policy. At the same,…

Open enrollment starts Oct. 15 for people who’ve signed up for Medicare and must buy into or change their supplemental Advantage or Part D prescription drug plans. The Medicare Rights Center in New York tells me that you can “make as many changes as you need during this period” and that “only your last coverage choice will take effect Jan. 1.” A long list of resources appears at the end of this blog to help Medicare beneficiaries through the enrollment process. But there’s a lot of hoopla around the Oct. 15-Dec. 7 enrollment period, so it’s important to know what Oct. 15 is not about. One’s birthday – and not a date on the calendar – determines when people should initially…

Parents have finished the summer college tours with their teenagers.  Now comes the hard part: figuring out how to pay for college. But Judith Ward, a senior financial planner for T. Rowe Price in Baltimore, urges parents to prepare for this moment well before their child’s high school graduation to help minimize college costs when the time comes. Squared Away interviewed Ward, whose advice comes from a combination of her professional experience and putting her own two kids through college. They are now 23 and 27, employed, and paying back modest student loan balances.   Your company’s 2016 survey of parents and children between ages 8 and 14 about paying for college points to a disconnect between what young kids…