Squared Away Blog

Baby boomers face a Catch-22. Many boomers will have to stay employed longer than they’d hoped to close the gap between what they’ll need in retirement and what they can realistically afford. Yet the job market is tough for job-hunting older workers, and if they are employed, wages stagnate or decline when people get into their 50s. A new report by the AARP Public Policy Institute shows the continuing toll on workers ages 45 and older who have suffered a bout of unemployment since the onset of the Great Recession. Lower pay, fewer hours, or more limited benefits in their new jobs and a prolonged inability to find any job are plaguing these workers. AARP found that only half of those hit…

Knowing how to budget or invest one’s retirement savings are useful skills. But managing money isn’t just about what you know – it’s also about how you feel. That’s the gist of a handful of recent studies into a newly identified emotion known as financial anxiety. These early studies look at two things: 1) is financial anxiety real?; and 2) does it explain why people do things like avoiding money issues or going into debt to paper over their financial problems? The evidence says yes to both questions. A 2012 study established financial anxiety as an identifiable psychological condition that can be measured using a standard psychological test. The researchers gauged their subjects’ reaction times to pairs of words flashed…

The “longevity economy” (i.e., aging baby boomers seeking long lives) meets “the quantified self” (tracking everything we do online) in the above video about technologies that help aging boomers stay fit. The PBS video shows off some of the products being developed to cater to an enormous market of some 100 million Americans over age 50, who are spending about $7 trillion per year. Products include a treadmill desk, technology that reveals sleep patterns, and fitness watches measuring everything from blood pressure to how many steps are walked daily. One issue not mentioned is the privacy around health matters that boomers sacrifice when their every move and personal health metric is a digital data point stored in the cloud. Younger…

Americans have been labeled everything from the Greatest Generation to Generations X, Y, and Z. Are you ready for the Centenarian Generation? The number of 100-years-olds has roughly doubled over the past two decades to more than 67,000 – mostly women – and the U.S. Census Bureau predicts it will double again by 2030. Just think about the implication of living for a century: retirement at, say, 65 means 35 years of leisure. This is unappealing to some, unaffordable to many, and it impacts us all. “We’ve added these extra years of life so fast that culture hasn’t had a chance to catch up,” Laura Carstensen, director of Stanford University’s Center on Longevity, said during a panel discussion at a…

Redlining, subprime mortgages sold in minority and immigrant neighborhoods, higher interest rates on car loans – black Americans have reason to distrust the financial system. This spills over into their retirement planning, specifically their relationships with financial planners and how much they save, concludes a study in The Journal of Personal Finance. Among the findings is that blacks and, to a lesser extent, Latinos have difficulty trusting planners. Past research shows trust can play an important role in financial decisions. People who trust the stock market, for example, are more likely to invest in stocks. But black Americans start out with generally lower trust levels: nearly half reported “low trust,” compared with only about one-quarter of whites, according to t…

These federal government resources should be helpful to Squared Away readers ranging in age from 20 to 70: Free credit report: Young adults in particular may not be aware they’re entitled to a free credit report from one of the major credit rating agencies. To ensure the report truly is free, click and follow the links to an outside source recommended by the Federal Trade Commission. To file a paper request or ask for a report by telephone, try the federal Consumer Financial Protection Bureau’s website. New U.S. Social Security Administration blog: The agency started a new blog last month to provide important benefit information under various programs. Here’s a sample of three useful articles on the blog: Replace dog-eared Medicare cards…

The share of college students who must borrow to pay for their education has surged over the past decade. Average borrowing per student is also much higher than it was in 2004, though there’s evidence it might now be in decline. Only now is serious research trickling in about the personal financial fallout from the nation’s $1 trillion-plus in student debt outstanding. But one new study reaches an interesting conclusion about the burden of student debt: it “is much greater among non-completers than among those who obtain a college degree.” One reason is that they can’t expect to earn the higher income that a degree confers on a graduate. The study – part of an edited volume published by t…

Due to differing tax treatments, each $1,000 placed into a traditional, tax-deductible 401(k) costs less today than $1,000 placed into a Roth 401(k), but that Roth will provide more money in retirement. New research indicates that workers don’t recognize this difference between the two types of employer-sponsored retirement accounts when deciding how much to save. A $1,000 contribution to a traditional 401(k) costs the worker less than $1,000 in take-home pay, because the income tax hit on the $1,000 will be delayed until the money is withdrawn from the account. But a $1,000 contribution to a Roth 401(k) costs exactly $1,000 in take-home pay, because the worker has to pay income taxes on it up front. The Roth funds, including…

Teen unemployment has shot up in recent years, and their participation in the U.S. labor force has dropped to historic lows. These data were highlighted in a series of recent reports by the Federal Reserve Bank of Boston expressing concern that this trend may have long-term consequences for today’s teens, including lower lifetime wages resulting from their early absence from the labor market. “This is a long-term trend that was going on prior to the Great Recession,” the author of the reports, Alicia Sasser Modestino, a former Federal Reserve researcher now at Northeastern University, said in a recent interview. Last year, nearly 54 percent of teens in the 16-19 age range who were trying to get their first job –…

The general public is very cool on annuities. But many economists like the idea of retirees using some portion of their savings to buy them. Annuities, with their fixed monthly payments, may be the best way to ensure retirees’ savings last just as long as they do. Otherwise, they may either spend it too fast and deplete their savings prematurely or spend too conservatively, depriving themselves of necessities in their old age. New research suggests that one reason retirees don’t buy annuities is because they have great difficulty figuring out what they’re worth. When they try to figure this out, they bump up against their own cognitive limitations – limitations that only worsen with age. In the study, 2,210 adults…

Parents should watch this video with their college-bound children. The young adults featured in “Voices of Debt” have one thing in common: a lack of understanding of the financial implications of debt at the time they were taking out their student loans.  So it’s critical that parents start this conversation early with their children. The compelling video, produced by Manhattan ad agency The Field, speaks for itself.  Similar videos can be found her…

Here’s actually some good news about student debt: borrowing by undergraduates is now declining. Annual borrowing by all full-time undergraduates peaked at $6,122 per student in the 2009-10 academic year and fell to $5,490 by 2013-14, according to the Urban Institute’s new report, “Student Debt: Who Borrows Most? What Lies Ahead?” For its shock value, the media toss around the $1.2 trillion figure – the total of all U.S. student loans outstanding. The institute provides a more refined look at student debt by diving into U.S. Department of Education data to learn who tends to borrow the most and why. The findings are summarized here: ……