Black Americans Give More to Relatives

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…

April 5, 2016

401ks: an Employer-Employee Disconnect

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…

March 31, 2016

Work Absenteeism Tied to Money Stress

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…

March 29, 2016

Americans Are on a Credit Card Binge

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…

March 24, 2016

Rise in Fraud Reports is Unrelenting

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…

March 22, 2016

How Federal Taxation Drops for Retirees

Taxes are not as inevitable as most people assume. As the chart shows, the share of Americans paying federal income taxes falls precipitously after age 60. Young adults often have little or no tax liability, because they’re either in school or aren’t yet earning very much. Older people revert to a similar picture, after having paid taxes all their lives. The peak occurs around age 50, when nearly 80 percent of households pay federal income taxes. That share plummets to half at age 65 and to just over a third at 70, according to The Hamilton Project at The Brookings Institution, which produced the chart. [The chart is based on 2007 data; there may be some changes in current data,…

March 17, 2016

Private Student Loans: Borrower Beware

Privately financed college loans were less than 10 percent of the $1.3 trillion in unpaid student debt last year, according to the Consumer Financial Protection Bureau. The bulk of student loans are funded by the federal government. But the minority who borrow from private financial institutions often learn painful lessons after graduation: it is much more difficult to negotiate affordable repayment plans with private lenders. Private loans are unlike federal student loans, which have standardized repayment options and procedures. This blog is intended to help parents and future college students avoid getting into difficult situations in the first place with private loans. Squared Away interviewed two student loan experts at Clearpoint Credit Counseling, an Atlanta non-profit: Terrence Banks, a counselor…

March 15, 2016

A Familiar Dilemma: to Work or Retire

This profile is the first in an occasional series about individual baby boomers who either have retired or are facing the retirement decision.   Jane Kisielius Jane Kisielius is at that age – 63 – when she is being pushed and pulled between the work world and the retirement lifestyle that her husband already inhabits. She retired once – temporarily – in August 2014 from a stressful job as head of the nursing team for the public schools in Quincy, a suburb southeast of Boston. But with her administrative and nursing skills in such demand, she was quickly sucked back into the labor market, this time as a part-time coordinator of a wellness program for Quincy residents. She was asked to…

March 10, 2016

Study: College Debt Hurts Retirement

College graduates learn very quickly that paying hundreds of dollars toward student loans each month makes it difficult to afford things like a nice apartment or a car. But they might not appreciate the long-term consequences of their record levels of borrowing: college debt is an added threat to their retirement security, according to a new study by the Center for Retirement Research. The researchers gauged the debt’s impact by looking down the road to retirement and projecting what would happen if working people of all ages had started out with the same profile as young adults: 55 percent of today’s 20-something households have student debt, and they owe $31,000, on average. College debt has a bearing on retirement security…

March 8, 2016

Rising Rents Slam the Middle Class

First it was the Irish, then Portuguese, then Brazilians – for more than 150 years, Somerville, Massachusetts, absorbed wave after wave of immigrants. Today, hipster professionals are pouring into this city next door to Boston. Somerville rents have shot up as much as 50 percent in 15 years, and a two-bedroom apartment for under $2,000 in a shabby chic neighborhood is a rare find. A similar trend is playing out all over the country – from Boston and Miami to Los Angeles and Seattle – and it’s squeezing working- and middle-class families the most, according to the Joint Center for Housing Studies at Harvard University. ……

March 3, 2016

Loneliest Seniors Vulnerable to Fraud

“Lost my husband to 9/11 terror attack” – using heartbreaking stories like these, a U.K. scam that became public last month persuaded some lonely older men to turn their money over to widows. This report is a dramatic illustration of a relationship between loneliness and fraud that has been uncovered in recent research. That study found that people over 50 have been vulnerable to being victimized by fraud in recent years – but the prevalence of fraud was three times higher among people who are extremely depressed or lonely. The 2013 study in the journal Clinical Gerontologist might be the first to examine financial exploitation from the point of view of psychological vulnerability. It was based on a general survey…

March 1, 2016

Home Equity: a Retirement Resource

The National Council on Aging (NCOA) has redesigned its website providing information for “house rich but cash poor” older people who want to think about tapping their home equity. Home equity – the house’s market value minus the amount owed on the mortgage – remains a largely unused source of income that many older Americans could be putting toward their medical care or to improve their lives. Home equity held by Americans age 62 and over reached $5.76 trillion last year – an increase of nearly 30 percent since 2013. A marker of how much of this retirement resource remains untapped is the small number of federally insured reverse mortgages – about 50,000 – that seniors take out every year against t…

February 25, 2016