Squared Away Blog

Total U.S. spending on prescription drugs by individuals, insurers and governments jumped 13 percent last year – the largest increase since 2001. One in four Americans report having difficulty paying for medications. Older Americans are somewhat shielded from the full impact of rising drug prices by Medicare’s Part D program, which greatly expanded their coverage. Since Part D’s implementation in 2006, seniors’ average out-of-pocket spending on medications has actually declined, from $708 to $564 annually in 2012. But a recent trend of price spikes for specialty drugs might be a snake in the grass for seniors on fixed incomes. Since most take multiple prescriptions, they face greater odds of needing at least one of these expensive medicines. Drug cost stability…

Day care, sneakers, cell phones, maybe college – kids are expensive. When they grow up, empty-nesters face a decision about what to do with their extra money. What they choose is crucial to their retirement security for two reasons – one obvious, and one subtle but very important. The Center for Retirement Research estimates that about half of U.S. workers might not have enough savings to maintain their standard of living after they retire. So, the obvious thing to do after being freed from child-rearing obligations is to put more money into an employer retirement plan. But 401(k) saving increases only modestly after the kids leave home, according a study by the Center comparing empty-nesters with parents whose kids ar…

Poverty is the scourge of women in old age. This problem was aggravated, according to a new study, when older workers started claiming their Social Security benefits sooner after the earnings test was lifted in 2000 for those who reach the program’s full retirement age. The earnings test withholds benefits from older workers earning more than a specified amount – the withheld benefits are returned later, in the form of an increase in monthly Social Security checks. But the earnings test is, nevertheless, often viewed as a tax in the mistaken belief that these benefits are never restored. Researchers at the U.S. Treasury Department and the University of California at Irvine found that people reacted in one of two ways…

Over the long Christmas holiday, I got a sneak preview of what retirement could be like. Frankly, it was a little boring. I fully appreciate that most workers don’t have the perk provided by my employer, Boston College, which gives us generous time off between Christmas and New Year’s. By cashing in a few unused vacation days prior to Christmas, I was able to string together 16 glorious days off. It felt like a lifetime. After cleaning off my desk, running long-neglected errands, reading a book about the sinking of the Lusitania, wrapping gifts, stocking the pantry, going to a holiday party, exercising at the gym, seeing most of the 2015 Oscar contenders at local cinemas, and getting together wit…

In the 1960s and 1970s, the baby boom generation had a reputation for breaking down societal norms for behavior – and they’re at it again. Between 1990 and 2010, the rate of individuals over age 50 who become newly divorced in a year doubled to more than 10 people affected per 1,000 married people, according to Susan Brown, a sociologist at Bowling Green State University. Studies by Brown and others are emerging that show this important trend of “gray divorce” is having negative consequences for baby boomers’ financial security in old age. “Individuals who go through gray divorce are considerably economically disadvantaged, and they are a growing demographic group,” Brown said. She estimates nearly 650,000 people over 50 were involved…

Will you retire when you want to, when you have to, or when you can afford it? This is crucial, because when Americans retire is more important than it’s ever been to our financial well-being in old age. Yet the research indicates this doesn’t carry enough weight in people’s decisions. This doesn’t make any sense. The typical combined 401(k)/IRA balance is a slim $111,000 for working households between 55 and 64 years old that have a 401(k). And fewer and fewer retirees have defined benefit pensions, which provide reliable income. More than half of us are at risk of experiencing a decline in our standard of living after we retire, estimate economists at the Center for Retirement Research, which supports…

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Squared Away readers should know this ritual by now. We consult Google Analytics to determine the articles with the most reader traffic over the past year. This blog covers everything from student loans to helping low-income people improve their lot. But this year’s Top 10 was dominated by one topic: retirement. Readers’ favorites are listed in order of their popularity, with links to each individual blog: Navigating Retirement Taxes Medicare Primer: Advantage or Medigap? Why I Dropped My Financial Adviser The Future of Retirement is Now Annuities: Useful but Little Understood Winging it in Retirement? Fewer Need Long-Term Care Misconceptions about Social Security Late Career Job Changes Reduce Stress Mortgage Payoff: Freedom versus the Math To stay current on our…

A Lady Writing By the 17th century, the Netherlands had developed a major financial industry and thriving maritime commerce in goods produced by the country’s textile mills, dairy farms, herring fisheries, and sugar refineries. The resulting large and diverse middle class supplies the rich subject matter for a portrait exhibit at Boston’s Museum of Fine Arts. The paintings in “Class Distinctions: Dutch Painting in the Age of Rembrandt and Vermeer” are grouped into one of the three classes: the upper crust, the middle classes, and the laborers and indigent. The Dutch elite – nobility, textile merchants, and wealthy landowners – commissioned portraits “to express and affirm their status,” according to exhibit materials. These paintings are replete with class symbols, such as…

Many Americans have poor habits around saving for retirement, but tapping a 401(k) to buy holiday gifts seems beyond the pale. Yet that’s precisely what some people do. In a new T. Rowe Price survey of 1,000 adults, 7 percent said they have spent some retirement savings on “holiday spending.” Surprisingly, men are more likely to do so than women, who, the survey indicates, are better at planning ahead for the holiday shopping season. The survey doesn’t specify whether this spending is on gifts or a sleigh ride to grandma’s house, but it doesn’t really matter. When the commercial pressures of Christmas start eating into long-term saving for retirement, it seems to confirm that it’s too easy to withdraw money…

Americans who save for retirement throughout their working lives often hold tight to that savings after they retire. A new study shows they eventually do spend much of this money and sheds light on where it goes. The study focuses on the retirement spending patterns of couples, adding to similar past studies on single retirees. While both spouses are alive, the researchers found that a couple’s wealth remains relatively stable over time – until they start paying for medical care, nursing homes, and other major end-of-life expenses. The researchers examined spending patterns for more than 4,600 households over a 15-year period using a subset of the Health and Retirement Study that collects data on the health and wealth of peo…

Some people might plan to work well into their 60s if they can’t afford to retire, or if they just think they’ll be around a long time. But this strategy is more difficult for women to execute than for men. A study of employer discrimination in hiring found “strong and robust” evidence that female job applicants in their mid-60s were much less likely to be called in for interviews for low-skill jobs than were younger women. Evidence of age discrimination among older men was more mixed, or even non-existent in one occupation. “It seems there was age discrimination for women – no matter what,” said Patrick Button, an economist at Tulane University. To conduct their meticulously designed study, the researchers…