Squared Away Blog

When older workers are weighing whether to retire or carry on for a few more years, it’s unsurprising that the characteristics of their jobs are a big consideration: Higher pay keeps workers in the labor force longer. Workers who feel discriminated against are often the first to retire. But personality also matters, says a team of researchers from the University of Southern California (USC) and the RAND Corporation who analyzed data from the Health and Retirement Study, an on-going survey of age 50-plus U.S. households. Consider two types of personalities – highly active and engaged, and passive and reserved.  The researchers found that higher wages are effective in persuading more passive people to continue working.  But monetary rewards are, for…

Whether or not you agree that the minimum wage should be raised, there are very real financial strains on the 5 percent of U.S. hourly workers who earn no more than $7.25 per hour, the current federal minimum wage. This video, produced by Bloomberg TV, puts a human face on a few of these 3.5 million workers.  Data from the U.S. Bureau of Labor Statistics provides more information about who they are: Nearly half are over age 25. Two-thirds are women, and one-third are men. About three-fifths of minimum-wage workers are in service occupations, such as food preparation and food servic…

Medical debt is a primary cause of bankruptcy.  But new research finds that the Massachusetts health reform, by extending health insurance to a greater share of the state’s population, has reduced residents’ total debts and bankruptcy filings and improved their credit scores. This experience is especially relevant now that the federal Affordable Care Act (ACA), modeled after Massachusetts’ 2006 reform, has effectively made health insurance mandatory nationwide, starting this year. Health insurance is central to a household’s financial health, because one medical catastrophe can blow a hole in their savings account or throw them into bankruptcy.  Most households who lack coverage are in the bottom half of the income distribution, and more than one in three uninsured individuals can’t afford…

In the aftermath of the women’s movement of the 1960s and 1970s, the incidence of divorce climbed, peaking around 1980. Millions of women were suddenly on their own at a time when women were still having to prove themselves to many employers.  But I remember being impressed by a college friend’s mother whose divorce wasn’t the disaster her family feared: she marched into a high-profile non-profit in Chicago and landed an impressive job. It’s been well established in academic research that women often face financial struggles after divorce.  Married women are typically better off, since couples can live more cheaply and since two incomes are better than one. But a new long-term study of women who divorced during the mid-1970s…

In this video, an expert in financial behavior explains the common errors in reasoning, whether people are thinking about love or money. Thoughts like: • This time is different. • I can change things. • Wishing on a star. • Being afraid of loss…

The Great Recession is receding into the past, but many people may still be feeling the strain in their personal finances. Post-recession, “the fact remains that Americans are fairly unsatisfied about where they are financially,” Gerri Walsh, president of the FINRA Investor Education Foundation, said in a recent video in which she discussed her organization’s 2012 National Financial Capability Study. The study, the nation’s most comprehensive survey of financial literacy and well-being, reported some areas of progress for average workers. Compared with 2009 – the depths of recession – more people felt they were better able to make ends meet in 2012. But a substantial minority of Americans were still living paycheck to paycheck. A previous blog post provides other…

Jessica Smith, mother of four, was never much of a saver.  But a credit union that dispenses prizes has changed all that. She now saves $150 every month out of her pay and bonus as a restaurant buffet manager.  Each $25 deposited into her account gives her one more entry in a monthly drawing for cash prizes at the Communicating Arts Credit Union in Detroit. Jessica Smith and her winnings. By coincidence, she won three times last fall – a total of $100 in prizes. But in contrast to throwing money away on a lottery ticket with bad odds, she earns a little interest on her credit union account. These so-called prize-linked accounts aren’t a new concept: one of t…

The IRS effectively gives money away to low-income Americans who save for retirement. Workers meeting the agency’s income requirements can receive a Saver’s Tax Credit equal to as much as half of their total deposits into a 401(k) or IRA. The lower one’s income, the bigger the credit. The program, which was made permanent in 2006, gives a nice boost to the nation’s lowest-paid workers, who are also most vulnerable in retirement. And not taking advantage of the credit, said Jim Blankenship, a financial planner in New Berlin, Illinois, “is a lot like giving up an employer match for a 401(k).” Low-income workers do just that, a previous study found: 40 percent decline to participate when their employer offers a…

In this video clip from “Shameless,” young adults may relate to Fiona’s reaction to “the 401(k) talk” by a manager who pops into Fiona’s cubicle. This popular television dramedy, “Shameless,” is about the dysfunctional Gallagher family of Chicago, and oldest daughter Fiona (played by Emmy Rossum) does what she can to keep things together.  But how to cope with the 500-page 401(k) binder her manager drops on her desk with a thud? It’s been rare that 401(k)s are mentioned on television.  So, why have retirement savings accounts entered our popular culture?…

There’s a growing awareness of the chasm between average working Americans and those at the top of the earnings scale. What isn’t widely recognized is that this broad economic trend is spilling over into retirement incomes, which depend on how much people earn and save while they’re still working. “The increasing wage inequality we see during the working years plays out over the life course and will result in more unequal incomes at older ages,” said Richard Johnson, an economist with the Urban Institute in Washington. Johnson recently compared the incomes of today’s retirees with his income projections for the youngest members of Generation X who will enter retirement in about 30 years.  He found that the imbalance between thos…

Older Americans who are in debt are choosing to delay their retirement, researchers conclude in a new working paper. In earlier findings released last summer, the researchers, Barbara Butrica and Nadia Karamcheva of the Urban Institute, documented the growing prevalence of borrowing since the late 1990s among adults ages 62 through 69. Median debt levels among those who owe also surged from $19,000 to $32,100, adjusted for inflation – and debts as a share of their assets increased. Now comes the rest of the story. When the researchers controlled for health, financial assets, home values, and other forms of wealth, as well as spouses’ earnings and other factors that play into decisions about retiring, they found that individuals with debt,…

Every day, some 10,000 Americans are turning 65, and every day, more of them start thinking about their long-term care. For help, try the U.S. Department of Health and Human Services’ recently redesigned website, Longtermcare.gov. It’s very easy to navigate and is packed with reliable information to help visitors: Search for specific types of services in your area, by zip code. Learn whether your home and location are compatible with aging in place. Analyze long-term care costs, by type of service and stat…