Squared Away Blog

As he logged on to his online 401(k) retirement account, Jordan Tirone, a 25-year-old insurance underwriter, explained the mental accounting behind his 5 percent contribution. He pays $300 a month to live with his mother so he can pay off student loans. Nevertheless, a regular paycheck from his Hartford, Conn., employer is finally giving him some financial stability. “I’m feeling like I’m gaining some traction,” he said. Spontaneously, he clicks his mouse and increases his contribution to 6 percent of his salary. Although it can be difficult to focus on a retirement that is still 40 years away, many young adults like Tirone try very hard to save. But are they doing enough? A lot of evidence suggests they’re not,…

When my new partner and I bought a condominium last month to accommodate our combined stuff, I remembered that borrowing so much money can be an emotional, even terrifying, ordeal. It’s difficult to think clearly. But attention should be paid to closing costs, which add to the cost of buying a house. So I decided to apply my skills as a veteran newspaper reporter and grilled my lender, attorney and real estate agent about these costs. Despite my diligence, I was only modestly successful at reining them in. But I stepped on a few land mines that might help other homebuyers: The HUD-1 matters: Federal law requires prospective mortgage lenders to provide loan applicants with a “good faith estimate” of…

Individuals earning nearly $46,000 a year and families of four earning $94,000 may be eligible for federal tax credits under the new health care law. Tax credits are the mechanism by which the federal government caps how much people pay for health insurance premiums, which are set by the private market. The premium caps are based on how much someone earns, relative to the federal government’s definition of poverty. Here’s an example of how premiums are calculated for, say, young, single workers who earn between $17,236 and $22,980 per year, which is between one-and-one-half and two times the poverty level. The premiums, which range from 4 percent to 6.3 percent of their income, start at about $57 a month for…

The Henry J. Kaiser Family Foundation just released an excellent interactive slide show explaining how the Affordable Care Act addresses the various health insurance and financial challenges facing 47 million uninsured Americans. Kaiser divided the uninsured into 10 groups – 28 million part-time workers, 8 million adults in their early 20s, and 3.5 million self-employed people, among others – with details about the specific provisions pertaining to each. There’s a lot of detail here, so focus on the profiles that interest you most. Advance through the slides by clicking the arrow at the bottom of the screen. To return to the home page, click the “house.” ……

The evidence is clear: fraud causes investors to shed their shares of stock. When the stock market is booming, fraud swirls unnoticed beneath the frothy surface. Only when the market busts, as it did in the fall of 2008, are allegations of fraud and financial shenanigans exposed to the public. When they are, and rattled investors realize what has taken place, they decrease their stock holdings – whether they own shares in any of the fraudulent companies or not – according to researchers in Stockholm and at the University of Minnesota. Their study analyzed changes in equity holdings among U.S. households in response to more than 700 Securities and Exchange Commission charges and other reports of fraud from 1984 throug…

There was a silver lining in the recent housing market collapse: prices dropped to more affordable levels for American families who didn’t already own. Buying still isn’t easy. It’s become more difficult to qualify for a mortgage from banks and other lenders that have tightened up their credit qualifications. But the following chart, which also appears on page 11 of a chartbook released by the Urban Institute’s new Housing Finance Policy Center, shows the dramatic improvement in home affordability in the wake of the market’s recent downturn. The blue line shows actual house prices over time – that’s the median, or middle, price for every single home sold nationwide in a given year. The red line shows the maximum a…

Americans in their 70s and 80s have earned more and are wealthier than the baby boom generation – for the simple reason they were born at the right moment in history. It was easier for members of this older generation to get ahead, because they came of age in the aftermath of World War II, when economic and demographic trends were strongly working in their favor, contends new research by William Emmons and Bryan Noeth of the Federal Reserve Bank of St. Louis. The emergence of a modern social safety net and the rise of unions may’ve also contributed to their relative prosperity, they said. Baby boomers born after about 1950 do not seem to have the same income and…

Enrollment in the federal food stamp program, known as SNAP – for Supplemental Nutrition Assistance Program – has more than doubled over the past decade to 47 million. What’s remarkable is that for the first time the number of Americans receiving food stamps increased even in a period when the economy was growing. During the 2003-2007 expansion, the SNAP case load, in a break with historic trends, rose 24 percent. One explanation is the change in the longstanding correlation between the unemployment rate and poverty, according to research findings by economists Matt Rutledge and April Yanyuan Wu of the Center for Retirement Research, which were presented at the Retirement Research Consortium meeting in August. Poverty used to fall in tandem…

Prithi Gowda’s animated video was one of two winners in a competition among New York University film school students and alums to produce a video that would turn young adults on to mutual funds. The winners were awarded a trip to Monaco to premier their work. The filmmaker practices what she preaches in this short animation, “Frenemies.” Gowda’s freelance work as a website designer and videographer for Wall Street firms has allowed her to build up “a nice, comfortable savings.” Investing, she said, has given her the freedom to start her own company, 21st Street Projects in Manhattan. “I just feel strongly the world could be a much better place if people really understood how to deal with their finances,”…

New research shows the share of Americans who lack enough ready cash on hand for emergencies shot up in the aftermath of the Great Recession. These families do not have access to the liquid assets – cash or funds in their checking or savings account – to cover emergencies like layoffs, health crises, or even car repairs, according to an analysis of federal data by Caroline Ratcliffe of the Urban Institute, who presented the finding to the Congressional Savings and Ownership Caucus in late September. Ratcliffe’s measure of financial fragility was families who did not have enough liquid assets to subsist at federal poverty levels for three months. That amounts to $2,873 for a single person, $4,883 for a family…

Husband, wife, grandmother, uncle, elderly friend – we all need a devoted caregiver when we grow old. But in a not-distant future, according to a new report from the AARP’s Public Policy Institute, the number of family and close friends available to fill this demanding role will decline sharply. It’s unlikely there will be enough of these unpaid caregivers for the multitudes of aging baby boomers. Today, there are seven Americans between the ages of 45 and 64 for each individual who is at least 80 years old. The baby boomers, largely because there are so many of them, have done a good job of caring for their parents born during the Depression era. One surprising result has been a…

Upon retiring, you suddenly have access to a chunk of money that’s been accumulating in your 401(k). It’s easy to make a move that incurs unfamiliar tax consequences or otherwise jeopardizes your hard-earned savings. Based on interviews with financial planners, as well as experts at the Center for Retirement Research, which funds this blog, Squared Away assembled the following check list for imminent and new retirees: At least one year before retiring, collect information from: Social Security – how does your monthly check vary, depending on the filing age you select, and how can you and your spouse determine the best strategy for getting the benefits you’ll need? Your employer – is an annuity an option in your 401(k) plan,…