Mortgage Payoff? Freedom vs the Math

Financial planner Diahann Lassus views as misguided the “obsession” some baby boomers have with paying off their mortgage before they retire. But Jane Rose, who has done just that with the loan on her home in Cherry Hill, New Jersey, has discovered how liberating it is. “I’m such a happy camper,” she said. The math versus the emotion, the rational versus the irrational, head versus heart – that’s a simple way of framing a complex issue. Many boomers looking ahead to their retirement years are grappling with whether to pay off their mortgage before they retire or shovel any spare funds into their employer’s 401(k). Both arguments have merit for very different reasons. First, the math.   The alternative to paying…

November 12, 2015

Men Save More – Women Save Better

This will not surprise you: men have more money saved for retirement than women. Men averaged $123,262 in their defined contribution plans, compared with $79,572 for women, according to a new report by Vanguard based on its 2014 recordkeeping data. But these figures hide a larger truth: women are actually better at saving for retirement. “Overall, women are better at this but men earn more money so they have higher wealth accumulation,” says Vanguard researcher Jean Young, author of the new report, “Women versus Men in DC Plans.” Young’s research found that women are 14 percent more likely to enroll in a voluntary workplace retirement savings plan. Women save 7 percent of pay, compared with 6.8 percent for men, controlling…

November 10, 2015

Meaningful Work Improves Health

Older workers with jobs that give them a high degree of control and influence or a sense of achievement and independence tend to be healthier, new research finds. The specific benefits of these “psychosocial” aspects of work include lower blood pressure, musculoskeletal agility, better cognitive functioning and improved mental health. They’re equivalent to the health benefits associated with vigorous exercise three times a week, the study found. Researchers long ago established a strong connection between poor health and jobs requiring strenuous physical activity in harsh conditions. This new study looks at a wide array of psychosocial job characteristics increasingly relevant in the New Economy, as well as revisiting the grueling physical characteristics prevalent in the manufacturing-driven economy of the past…

November 5, 2015

5 Financial Goals for Teens, Young Adults

The above video qualifies as Personal Finance 101 – one critic dismissed it as nothing more than “common sense.”  But that’s appropriate for the audience and worth sharing with teenagers and young adults in your life who are just starting on a financial path. The speaker, Alexa von Tobel (three years before she agreed to sell her online advisory company to a major insurance company for millions of dollars) provided common sense goals for people who get their money the old-fashioned way – one paycheck at a time. She proposed these five financial priorities (with minor alterations by Squared Away): Follow a budget. Have an emergency savings account. Strive to become debt-free. Pay credit cards in full. Negotiate your salary. Save for retirement to secure employer’s…

November 3, 2015

Fewer Boomers Get Social Security at 62

The best way for most individuals to increase their retirement income is by delaying Social Security – each year they wait significantly boosts their monthly benefit check. It seems that baby boomers are getting the message. The share of people who claim their Social Security benefits at age 62 – as soon as they’re eligible – is falling, and falling more rapidly than previously thought. The share of 62-year-old men who claimed immediately dropped from 56 percent in 1996 to 36 percent in 2013, according to the Center for Retirement Research, which supports this blog. For women with the same birth years, the share of 62-year-old claimers declined from 63 percent to 40 percent. The Center also confirmed that mor…

October 29, 2015

Health Insurance Costs Squeeze 401ks?

U.S. workers’ wages, adjusted for inflation, are stagnating, but their share of health care costs keeps going up. “Something has got to give, right? That something could very well be the 401(k) or 403(b) plan,” said Mark Zoril, a personal financial planner and benefits adviser to small companies. Six in 10 workers agreed: the rising cost of their health insurance “directly affects” how much they set aside in their retirement savings plan at work, according to a new survey gauging the “financial stress” of more than 2,000 full-time employees with health coverage. The random survey was conducted by LIMRA, a financial services research organization. Despite a slowdown in medical inflation, employees are paying a growing share of the tab for…

October 27, 2015

Polishing the EITC on its 40th Birthday

The Earned Income Tax Credit is a critical lifeline that lifts some 9 million low-income Americans out of poverty – half of them children. But the federal tax refund program isn’t perfect. The large refunds come just once a year, in the spring tax filing season. A cash crunch is a year-round problem for working families with low or erratic incomes who can’t always pay their bills. A new study by the Center for Economic Progress identified additional financial benefits from the Earned Income Tax Credit (EITC) when participants in a Chicago pilot project received smaller, regular EITC payments throughout the year. For example, workers who received the quarterly payments – in May, August, October, and December – were muc…

October 22, 2015

Straightest Course to Riches – Parents

Some Boston University students cruise city streets in their BMWs or Lamborghinis. Three of Donald Trump’s five children have joined the family business so far. And the financial media are full of useful advice for parents who might want to buy a house for their adult offspring. Nature versus nurture? Not surprisingly, nurture won out when researchers applied this question to who has more influence on the wealth of young adult Swedes who were adopted as children – their biological parents (nature) or their adoptive parents (nurture). Wealth “is not due to the fact that children from wealthier families are innately more talented,” the international team of researchers concludes. “Instead, it appears that even in a relatively egalitarian society lik…

October 20, 2015

High-deductible Health Plans on the Rise

Health insurance is really starting to hurt. Premium increases and deductible creep, documented in the Kaiser Family Foundation’s comprehensive annual survey of employer health benefits, are eye-popping figures. Although there has been a slowdown in medical inflation and health care spending overall, the growing prominence of high-deductible plans is evidence that more of these costs are shifting to employees. One in four workers today is enrolled in a health insurance plan with a high deductible – up from 4 percent a decade ago – exposing them to larger out-of-pocket expenses than traditional health plans if they become ill. [Kaiser’s definition of high-deductible plans is that they are accompanied by a tax-preferred savings plan to help workers pay their medical bills.]…

October 15, 2015

Free Help Navigating the Medicare Maze

HICAP, SHIP, SHINE – whatever your state calls the program, the mission is an urgent one. With some 10,000 baby boomers turning 65 every day, these programs help new enrollees grapple with their Medicare options and make decisions, especially during open enrollment, which begins on Thursday and ends Dec. 7. Medicare is “confusing” to boomers, because they “have more than one option, and most of us, when we were working, had only the PPO or the HMO” to choose between, said Christina Dimas-Kahn, program manager and a telephone counselor in San Mateo County, California’s Health Insurance Counseling and Advocacy Program (HICAP). The top requests for assistance coming into her office are from new enrollees to Medicare, followed by the elderly…

October 13, 2015

Blacks Invest Less Often

If two people – one black, one white – have good jobs with comparable incomes, the black person would still be less likely to have a taxable investment account, such as a mutual fund, a new study finds. Numerous reports have shown that black Americans have fewer retirement and other savings accounts, and less money in those accounts than white Americans. But the problem with many of these comparisons is that they lump people together, regardless of how much they earn. A new study by the FINRA Investor Education Foundation looks at one type of account – taxable investment accounts – and controls for income as well as two other characteristics that influence wealth: education and age. The study, using…

October 8, 2015

Your Aging Parents or Clients: 7 Tips

When Bob Mauterstock asked how many financial advisers in the room had elderly clients showing signs of diminished mental capacity, a few hundred raised their hands. Next, he asked, how many have a protocol for these clients? Fewer than 10 put up hands. With the U.S. population over age 85 growing at a rapid clip, advisers increasingly are facing this issue, he explained last week at the Financial Planning Association meetings in Boston. A 2009 Fidelity survey backs him up: 84 percent of advisers said they had clients touched by Alzheimer’s disease. Mauterstock, the author of “Passing the Torch, Critical Conversations With Your Adult Children,” shared seven tips to help advisers, clients, and their families. While many of his suggestions…

October 6, 2015