Squared Away Blog

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…

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…

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…

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…

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…

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…

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,…

Giving money to relatives. Oprah has done it – in the form of a $490,000 house for her newly discovered sister. Former NFL cornerback Phillip Buchanon just wrote a book complaining about it. And Charles Barkley is characteristically blunt about it. “When you continually come to me for money, that’s what ruins relationships,” Barkley explained on NBA TV. “I probably got $4-5 million I lent to friends and family I’ll never see again.” No one is immune to a relative’s appeals for financial help. But this is a perennial and far more prevalent issue among black Americans – and not just the ultra-rich like Oprah and Barkley – according to Rourke O’Brien at the University of Wisconsin. What O’Brien calls…

A survey throws a new spotlight on the employer-employee disconnect over 401(k)s that has also been well-documented in research studies. The survey of 1,000 employees reveals that workers lack confidence in their ability to navigate basic aspects of their retirement plans, while the 200 employers also surveyed have a more optimistic view of how workers are doing. Consider the most basic question of how much to put away for retirement. Two-thirds of employers believe their workers know how much to save, while only one-third of employees feel they know, according to BlackRock. And while nearly two-thirds of employers believe the majority of workers save enough, a minority of workers does. Most employers also believe their workers understand their investment options…

Most of us know how distracting and stressful it is when our credit card balance creeps up or there’s a gap between a bill’s due date and when our paycheck gets deposited. But financial stress can also create serious problems at work like absenteeism, problems that can turn around and compound the financial problems. More than one in four employees who said they deal with “financial stress” admit that it interferes with how well they do their jobs, says a new survey of 5,000-plus workers by the consulting firm Willis Towers Watson. It also increases absenteeism. The study found that workers stressed about their finances are absent from work 3.5 days per year, on average – nearly double the absenteeism…

Rising levels of credit card debt are a good thing and a bad thing. And they are definitely rising: during the final three months of 2015, Americans added $52.4 billion to what they owe on their credit cards, according to a new CardHub report based on Federal Reserve Board data. For context, that is nearly as much as was added to cards in all of 2014. Spending rises when consumers have jobs or get better jobs and when the economy is growing, as it is now, said Lowell Ricketts, an analyst with the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis. With incomes increasing, he said, “they’re in a stronger position to make those investments…

A nearly three-fold increase over the past decade in the number of fraud and related complaints filed with the Federal Trade Commission has pushed the total to 1.7 million filings in 2015, according to the government’s consumer 2015 data book released this month. As Squared Away reported recently, older Americans are often the most vulnerable, as their cognitive abilities decline or they become more socially isolated. Not surprisingly, the FTC said Florida had the highest rate of reported fraud per resident last year (followed by Georgia, Michigan, Texas, and Nevada). One reason for the increase in complaints is that people are increasingly aware of fraud and more likely to report it. Another is that fraud-reporting agencies such as law enforcement…