Squared Away Blog

How much must 30-somethings save in their 401(k)s to prevent a decline in their living standard after they retire? No two people are alike, but the Center for Retirement Research estimates the typical 35 year old who hopes to retire at 65 should sock away 15 percent of his earnings, starting now.  Prefer to retire at 62?  Hike that to 24 percent.  To get the percent deducted from one’s paycheck down into the single digits, young adults should start saving in their mid-20s and think about retiring at 67. These retirement savings rates are taken from the table below showing the Center’s recent estimates of how much workers of various ages should save to achieve a comfortable retirement; they represent…

In the 1970s, Americans saved about 12 percent of their after-tax income.  Today, that’s plummeted to less than 6 percent. Yet saving is in everyone’s interest. A new video produced by The Atlantic magazine, “Why Americans Are So Bad at Saving Money,” blames our savings apathy on three factors: math (the lower one’s income, the less people save); psychology (spending money is more fun); and envy (keeping up with the Joneses). The video doesn’t fully explain why this is an American problem.  But it’s accessible and thought-provoking. For example, the narrator notes that much of the national conversation is about wealth – taxing it, measuring its disparities, winning it in the stock market. We don’t expend a lot of energy…

Failing to meet one of Medicare’s many enrollment deadlines can be costly to new or imminent 65 year olds. The Journal of Financial Planning helps aging baby boomers start out on the right foot with a clear run-down of at least five different enrollment windows for various parts of Medicare. Getting these dates right is “very tricky,” and people often make mistakes that lead to higher out-of-pocket medical costs and gaps in their coverage, said Katy Votava, president of the consulting firm, Goodcare.com, and author of “Making the Most of Medicare: A Guide for Baby Boomers.” “They often receive well-meaning but mistaken advice, and then they’re really in a pickle,” she said. “They aren’t eligible to apply when they want to…

The Squared Away Blog’s focus is on how informed financial decisions can improve one’s personal finances or retirement prospects.  But much that impacts our standard of living is not in our control. One example is the cost of consumer goods, healthcare, and renting or buying a home, which vary widely from one city or region to another.  To highlight this variation, the Tax Foundation in Washington, D.C., used recent data from the U.S. Bureau of Economic Analysis to create the cool interactive map below, which shows locations with the highest cost of living (bright orange) and the lowest (bright turquoise). Running a cursor over the map displays metropolitan and rural areas and their comparative living costs, measured in terms of…

First, the facts from the Alzheimer’s Association. At age 65, one in nine individuals has Alzheimer’s disease.  At 85, the risk exceeds one in three.  Its victims are more often women. In the Ted video above, the global health consultant and writer Alanna Shaikh disclosed that her professor-father had Alzheimer’s. Since it can be hereditary, she’s preparing to possibly share his fate, by keeping her mind active and by learning to do things with her hands, such as knitting. Shaikh doesn’t discuss financial preparations. But experts have some suggestions, chief among them getting one’s will, health care directive, and perhaps a power of attorney in order.  Paramount in this process is finding trustworthy people to handle your affairs. You can…

In case anyone has forgotten, buying a home can be damaging to your financial health. But prospective first-time homeowners may want to take advantage of still-low mortgage interest rates and the recent, slower increases in house prices.  Homebuyer classes can provide an excellent crash course in the mysteries of mortgages, maintenance, taxes, and risks – information that can help preclude the kind of mistakes made during the subprime mortgage crisis. There’s a tool on the website of the federal government’s Consumer Financial Protection Bureau (CFPB) to search for first-time homebuyer classes and housing counselors. Enter your desired zip code here to find classes and counselors nearby. The agencies listed appear to be mostly non-profits and were approved by the U.S. Department…

Many recent U.S. retirees in a new survey receive less than two-thirds of what they earned during their working years, and they’ve made significant adjustments along the way. That finding for baby boomers who’ve retired in the past five years is contained in a larger national survey conducted by T. Rowe Price, the Baltimore mutual fund company. The full survey covered some 2,500 working and retired individuals, age 50 and over. All of them have at least some savings in a 401(k) account. The majority of the recent retirees reported their annual income is between $25,000 and $100,000. Social Security is the largest single source of that income, and smaller but equal shares come from defined benefit pensions and from retirement…

It’s old news that working people in the South earn less than residents of thriving communities in California, the Northeast, the Upper Midwest and elsewhere. What’s troubling is how many Southerners apparently can’t pay their bills. West Virginia, North Carolina, Alabama, Kentucky, Texas – they’re among 13 states where more than four in 10 state residents’ credit card or other debts have been sent to collection agencies, according to a July report by the Urban Institute. The report, based on data from the credit reporting firm TransUnion, provides insight into how many Americans continue to experience financial stress even though the recession is technically over.   The Urban Institute’s analysis doesn’t focus on mortgage debt, since delinquent home loans generally go…

It’s not hard to find glowing testimonials online about credit unions – friendlier staff, lower fees, and faster processing of loan applications, credit union customers say. “Way better than a bank!” Dan F. says about his Iowa credit union. Now this warm, fuzzy feeling among existing credit union members seems to be reaching the general public. The Credit Union National Association (CUNA) reports membership growth exceeded 2 percent annually for the past three years, ending a lull that was taking hold only a decade ago. In CUNA’s newest count – the year ending 2014 – total membership increased to 100.1 million members. CUNA president Bill Hampel’s theory is the financial crisis of 2008-2009 “soured a lot of people on t…

At 89 years old, retirement is one of the few things that has not made it onto Robert E. Levinson’s vita. Levinson almost single-handedly seems to be trying to start an anti-retirement movement. He feels so strongly that he once wrote a book titled, “The Anti-Retirement Book.” “I just feel very strongly that one should never retire, or if they’re forced to retire they should try to find something productive to do,” he said. Though not wealthy, Levinson is one of the lucky Americans. The long-time businessman and fund-raiser for a Florida college is college educated and said he is comfortable financially. But when he looks around his luxury senior community in Delray Beach, he sees pain and regret. Many…

Call it the anti-retirement movement – older Americans who are either resisting the lure of retirement or have eagerly exited a short-lived retirement to return to work. Squared Away tracked down three people who fit the profile of the type of people research has shown are most likely to keep working into their mid-60s, 70s, or even their 80s: college-educated go-getters who find unlimited travel or golf a tad boring. To be sure, these are the lucky Americans who have financial and other advantages that many older people lack. The extra money they receive from working, even if it’s part-time, isn’t their primary motivation, though it’s nice to have. And age has given them the luxury of crafting their own…

If buying a house or having children were once hallmarks of being a grown-up, something more basic marks a successful transition to adulthood today: financial self-sufficiency. Only half of more than 1,000 freshmen who entered the University of Arizona in 2007 and were tracked over time by researchers Joyce Serido and Soyeon Shim were employed full-time in 2013.  And only half of these full-time workers, ranging in age from 23 to 26 years old, supported themselves without help from family members. These young adults, mostly graduated, overwhelmingly said that achieving financial independence was critical, according to Serido and Shim’s new report, “Life After College: Drivers for Young Adult Success.” But achieving independence has been difficult due to unprecedented borrowing for…