Squared Away Blog

The economy expanded smartly in the years before the Great Recession, just as it did before the COVID downturn. But the two recessions were markedly different, with opposite effects on when older workers signed up for Social Security, a new study finds. In 2008, the stock market slid nearly 40 percent. Older Americans with retirement accounts, wanting to recoup their losses, were more likely to keep working or looking for a new job during the protracted downturn. But skyrocketing unemployment pushed many older workers in the other direction. Social Security became an obvious fallback in the Great Recession for jobless workers who were at least 62 years old as the unemployment rate stagnated at around 10 percent for 1½ years. Not surprisingly,…

Employers beware: changing your retirement plan’s design can have unfortunate, unintended consequences for your employees. That’s what happened to the Thrift Savings Plan (TSP) for federal workers, says a new study by a team of researchers for the NBER Retirement and Disability Research Center. Like many private-sector savings plans, the $500 billion TSP – one of the nation’s largest retirement plans – has automatic enrollment. Federal employees can make their own decision about how much they want to save and, in a separate decision, how to invest their money. But if they don’t do anything, their employer will automatically do it for them. In 2015, the TSP changed its automatic, or default, investment from a government securities fund to a…

Nursing homes are usually at the bottom of people’s list of places for their parents. A workable and little-known alternative is available in many states: adult foster care. This PBS video about Oregon’s program features a suburban Portland woman, Carmel Durano, who provides 24-hour care in her home for five elderly people, including her mother. Durano has been a good solution for Steve Larrence’s 99-year-old mother. He feels comfortable with Durano and lives in the same neighborhood, so he can walk over anytime to talk to his mother.  “You don’t feel like you’re in an institution. You feel like you’re living with a family,” Larrence said in the video. Durano is part of a network of more than 1,500…

In 2007, the majority of workers in The Netherlands were retiring by their early sixties to take advantage of the country’s generous pension scheme. Then came a sweeping 2009 policy that rewarded older workers with a tax break if they remained employed and active. In a new study, researchers used this tax break – the Doorwerkbonus, or continued work bonus – to ask the question: do people who worked longer in response to this policy also live longer?  The short answer is “no” for women but “yes” for men. Delaying retirement increased men’s lifespans by three months, compared with a group that was not eligible for the bonus, possibly because working longer improved their health. The tax break was t…

About one in four state and local government employees – some 6.5 million people – do not participate in the Social Security system. They get their disability insurance, as well as their pensions, from their employers. Whether the coverage is more or less generous than Social Security disability depends on the individual worker’s circumstance and how the state or local employer calculates benefits. But a new study concludes that public-sector workers who have a disability generally receive benefits that are at least as generous as the federal benefits. To compare them, researchers at the Center for Retirement Research had to construct a database with each state’s and locality’s eligibility requirements and benefit payments. The sample consisted of 67 different disability…

Married couples don’t necessarily know what the other spouse is thinking about retirement. This insight came out of a new Fidelity Investments survey that asked some 1,600 people if they knew when their significant other planned to retire. Only 43 percent answered the question correctly. This disconnect reveals just how few couples are talking about retirement, said Fidelity spokesman Ted Mitchell, who worked on the survey. Fidelity’s survey went out to adults of all ages, so the younger ones no doubt felt they’re too young to be thinking – much less talking – about what their lives will be like decades from now. But things change as couples age. When retirement comes into sharper focus, it’s natural to start talking…

The fact that the richest Americans are grabbing such a big slice of the pie isn’t exactly breaking news. What is news is that Wall Street is getting nervous about it. Moody’s Investors Service, a private watchdog for the federal government’s fiscal soundness, has concluded that inequality has reached the point that it threatens a system already being strained by increases in the federal debt. But Moody’s also noted that inequality is contributing to slower economic growth, which further aggravates inequality. The high level of U.S. inequality today “sets us apart” from Canada, Australia, and several European countries, Moody’s said in an October report, “Widening Income Inequality Will Weigh on U.S. Credit Profile.” Moody’s central concern is how inequality w…

Staying healthy is becoming a preoccupation for baby boomers as each new medical problem arises and the existing ones worsen. The stress of having too much debt isn’t helping. The older workers and retirees who carry debt are less healthy than the people who are debt free, and higher levels of debt have worse health effects, according to Urban Institute research. The type of debt matters too. Unsecured credit cards have more of an impact than secured debt – namely a mortgage backed by property. Debt can erode an individual’s health in various ways. The stress of carrying a lot of debt has been shown to cause hypertension, depression, and overeating. And it can be a challenge for people to…

As the American family becomes increasingly complex, so do parents’ wills. The result has been a dramatic increase over the past two decades in the share of wills in which parents distribute their estate’s assets unequally among their genetic offspring and stepchildren. New research, based on surveys of older Americans, finds that about one-third of parents today do not distribute their assets equally. The reasons range from the greater incidence of divorce and the inherent disadvantage of being a stepchild to the fact that some children naturally take on the role of caring for their aging parents. With parents now living longer and needing more care, children may receive compensation in the will for providing that care. About 42 percent…

Remarkably, middle-class Americans have at least as much money tied up in their homes as they have in all their retirement plans, bank accounts, and other financial assets combined. A hefty share of older U.S. homeowners are even better off: 41 percent between ages 65-74, and 63 percent over 74, have paid off their mortgages and own their homes free and clear. But only one in five retirees would be willing to use their home equity to generate income in a new survey by the National Council on Aging (NCOA). This reluctance seems to be on a collision course with financial reality for working baby boomers, when so many are at risk that they won’t be able to maintain their…

It’s old news that the many baby boomers who did not get married and stay married are worse off financially than those who did. Unfortunately, the financial damage to one segment of this generation has broken new ground. Only 44 percent of “middle boomers” – those born in the late 1950s – have remained married to their original spouses, down from 52 percent of their parents’ generation. Middle boomers are also far more likely to have lived with partners without marrying, remained single all their lives, or even to have divorced twice. The heart of a study is determining which of middle boomers’ choices were most likely to have led to financial distress when they reached their pre-retirement years. About 11…

Financial planner Diahann Lassus views as misguided the “obsession” some baby boomers have with paying off their mortgage before they retire. But Jane Rose, who has done just that with the loan on her home in Cherry Hill, New Jersey, has discovered how liberating it is. “I’m such a happy camper,” she said. The math versus the emotion, the rational versus the irrational, head versus heart – that’s a simple way of framing a complex issue. Many boomers looking ahead to their retirement years are grappling with whether to pay off their mortgage before they retire or shovel any spare funds into their employer’s 401(k). Both arguments have merit for very different reasons. First, the math.   The alternative to paying…