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

The Common Struggles of Working People

Brandi and Frank, the hypothetical couple in the above video, are drawn from extensive nationwide interviews with real Americans who work extremely hard, live modestly, and carry their financial anxiety through the day. Ten of these families were also featured in written profiles by the U.S. Financial Diaries project. Like millions of working Americans, these families are buffeted by economic forces ranging from stagnating paychecks to a scarcity of employer benefits in low-wage jobs. The project identified common traits running through their financial lives. They are continually trying to improve their lot, with education or by taking on extra jobs and by saving. Retirement saving, however, is a luxury – their saving is done to pay the unanticipated emergency or…

October 1, 2015

Don’t Worry About Money. Just Be Happy

The adage that money won’t buy happiness has been proved wrong – at least up to a point. One famous study found that one’s well-being increases as income rises, though the benefits subside around $75,000 per year. But what about the reverse? Do people who are happy earn more money? Yes, say two British economists. Their study in the Proceedings of the National Academy of Sciences concluded this after following American teenagers for a more than decade through the National Longitudinal Study of Adolescent Health. In 1994 and 1996, this survey asked high school students to react to statements like “You were happy” and “You felt hopeful about the future.” In a 2008 follow-up survey, when most of them wer…

September 29, 2015

Changes to Reverse Mortgages Continue

The federal government continues to work out the kinks in its reverse mortgage program. The latest change allows a non-borrower to remain in her home after her spouse, who signed the reverse mortgage, has died. The federal government established its reverse mortgage program in the 1990s to provide an alternative source of income for retirees over age 62. These Home Equity Conversion Mortgages (or HECMs) are secured by the equity in borrowers’ houses, and the loans are repaid only when they move or die. The loans are federally insured to ensure that borrowers get all the funds they’re promised, even if the lender fails, and that lenders are repaid, even if the value of the property securing the loan declines…

September 24, 2015

Prime-Age Job Market Still Weak

The job market appears in fine form. August’s unemployment rate, at 5.1 percent, is now at half of its Great Recession levels. But while the media latch on to the unemployment rate in the federal government’s monthly jobs reports, economists like Gary Burtless of the Brookings Institution are interested in a different number that’s also part of the monthly update: labor force participation among people in their prime working years, ages 25 through 54. They are the heart of the labor market, and the trend in their participation rate paints a bleaker picture of the job market, Burtless noted in a recent report. In August, the rate was just 80.7 percent – and still below the 83 percent level prior…

September 22, 2015

401(k) Catch-up: Help for the Few

Longer lives, eroding Social Security benefits, and rising health care costs – these are just some of the reasons older workers need to save more in their 401(k)s. To encourage them, Congress in 2001 approved a “catch-up contribution” for workers over age 50.  The size of this additional tax-deductible contribution started at $1,000 in 2002 and jumped to $4,000 by 2005 and $5,000 in 2006.  (After 2006, it continued to increase, though only at the rate of inflation, and is currently $6,000.) But the catch-up contribution has not turned into a broad-based solution to Americans’ retirement woes that some proponents had claimed at its passage.  According to researchers at the Center for Retirement Research (which supports this blog), it helps…

September 15, 2015

In Support of Allowances for Kids

With summer’s chaos subsiding and school starting, it’s time for a financial lesson wrapped in an allowance! The conventional wisdom behind a weekly allowance is that it impresses on children the limited value of a dollar.  But the benefits of financial education are not well-founded in academic research. The benefits of an allowance might have something to do with kids’ confidence in handling their money, which research shows is central to how well adults manage their finances. Kids between ages 8 and 14 who get an allowance were two times more likely to feel knowledgeable about managing their money than kids who do not – 32 percent versus 16 percent – according to a survey of 1,000 parents and 881…

September 8, 2015

Medicare Hotline Complaints Detailed

Last month, Squared Away published a primer for new Medicare enrollees choosing between their two available options: an Advantage plan or traditional Medicare plus a Part D drug plan and/or supplemental Medigap policy. Millions of beneficiaries receive their Medicare benefits without any major problems. But today’s blog is about a report detailing complaints to the national telephone hotline operated by the Medicare Rights Center, a non-profit patient advocacy organization.  Two of the top issues reported by seniors were denials of coverage and rocky transitions from employer or other health insurance into Medicare. Here are some of the findings: 60 percent of calls about Advantage plans involved denials of coverage for physician care, home care, therapy, medical equipment, tests and other…

September 3, 2015

New Online Financial Resources

Squared Away periodically alerts readers to information online that might be useful to them.  These three crossed the transom in August: Natural disasters quickly turn into financial disasters. On Hurricane Katrina’s 10th anniversary, the National Endowment for Financial Education and other organizations have released a guide, Disasters and Financial Planning.  The guide includes tips on how to insure properly against hurricanes, floods, or forest fires and how to hire contractors to make repairs after disaster hits. The U.S. Social Security Administration posts a raft of brochures online to explain everything from how to get your newborn’s Social Security number or replace your old one (citizen or non-citizen, international students) to disability information for veterans. There’s also information on federal benefits…

September 1, 2015

This Retiree Is a Lucky Dog

It would be even tougher for Sher Polvinale to get by solely on her late husband’s Social Security check of $1,700 per month if he had not bought a life insurance policy that has paid off their house. Despite her meager financial circumstances, Polvinale’s retirement is rich in rewards. This 69-year-old former payroll administrator for a construction company said she brings in $200,000 in annual donations for her non-profit, which cares for old, unwanted dogs that need expensive medical care and attention. One can’t help thinking, while watching the National Geographic video below about the retired dog sanctuary in her home, that many elderly people would be lucky to have such a place to live out their final years. For financia…

August 27, 2015

Workplace Benefit Inequality

Inequality goes beyond the wealth and income disparities that frequently make it into today’s headlines. Employer benefits also flow more freely to people at the top. The newly released survey of employers by the U.S. Bureau of Labor shows how stark the differences are. The charts below compare the share of private-sector workers in the lowest income bracket who receive benefits – their earnings are in the bottom 25 percent of all U.S. workers’ earnings – with the share in the top 25 percent. Four benefits are compared: health insurance, the percent of health premiums paid by employers, paid sick leave, and – since it’s August – paid vacations.                       For…

August 25, 2015