Squared Away Blog

Penny DeFraties, a teacher, shared her reaction to a 2012 article that appeared on this blog: The day I hit my minimum retirement age, I’m gone. I look forward to traveling, gardening, spending time with my grandkids, and volunteering at church, the American Red Cross and USO. My first husband died of a heart attack at 49-years-old, and my current husband lost his first wife to MS at 50-years-old. The notion that life is short is a valid reason to retire – to travel or enjoy the grandchildren before it’s too late. And the academic literature clearly shows that the age at which people exit the labor force is related to how long they expect to live. Building on this…

Confidence can be dangerous. It has led investors into fraudulent deals and businessmen into over-borrowing. But new research finds one circumstance in which confidence may be beneficial: retirement planning. Saving and investing can be so overwhelming that workers, judging by the low balances in most 401(k)s, often avoid it. So Andrew Parker, a behavioral scientist in Pittsburgh for the non-profit RAND Corporation, wanted to get at the psychological factors motivating those who do dive in and plan for their future. Parker and fellow researchers concluded that individuals’ tendency to engage in retirement planning and their self-confidence – how much they think they know – are “significantly and positively correlated with each other.” This was true even after their study accounted…

A new study out of Boston College finds that e-shopping for products while grasping an iPad increases the feeling of ownership of that product – and may make you more likely to buy it. The findings expand on a financial behavior issue explored in a popular Squared Away blog post about how the Internet has made it much easier to shop – and spend money. The new research distinguishes among the various technologies available to online shoppers and finds that the urge to buy may be even stronger when holding a touch screen device than when using a laptop or desktop computer. The way this works is that the tactile experience of holding a product – whether taking it off…

Vanguard Group Inc. founder John Bogle’s views about investing, not surprisingly, promote the indexed mutual funds that Vanguard offers.  But his views have solid support in the academic literature. Here’s our translation of his five simple rules for investment success – sound advice for readers who want to work on their 401(k) portfolios: Remember reversion to the mean. If a company’s stock or the overall market has had unusually strong performance, it’s unlikely to continue at that pace. Forget the needle and buy the haystack. Invest in broadly diversified funds, such as index funds that track the market – not in individual company stocks or the money managers who try to find the best ones. ……

More than 60 percent of Americans who participate in their 401(k) retirement plans at work are adding more dollars to their debts than they’re socking away in those plans, according to HelloWallet’s analysis of recent federal data. This shocking statistic suggests the need for some serious financial planning. Yet the vast majority of people in a recent survey said making a financial plan would not be among their 2014 resolutions. Why not? Many said they “don’t make enough money to worry about” a financial plan, according to Allianz Life Insurance Company, which conducts the survey. Okay. But if you feel unable or unwilling to write up a full-blown plan, perhaps you’ll consider one small step: ……

The blog posts that attracted the most readers this year provide a window into what’s on their minds. The 2013 articles shown below were the most popular, based on unique page views by Squared Away readers. We’ll return Jan. 2 with more coverage of financial behavior. Please click here to begin receiving our once-per-week alerts with the week’s headlines – and happy holidays! To find each article, links are provided at the end of the headlines: An historical perspective on the U.S. money culture: Oldest Americans are Lucky Generation More Carrying Debt into Retirement The financial challenges facing our youngest workers: Retirement Tougher for Boomer Children Student Loans = No House, No New Car Help with your imminent retirement: Revers…

Money matters can get complicated for couples who may not see eye to eye. In a recent interview with Squared Away, Kathleen Burns Kingsbury, author of the new book, “How to Give Financial Advice to Couples,” shared her tips and insights for couples trying to meet in the middle. Q: In a relationship, is money about more than just money? Kingsbury: Money is often a reflection of our feelings about security, respect, love, power – it really symbolizes these things, whether we’re aware of it or not. So how a couple talks about money and manages their money is a reflection of how they relate to each other in other areas as well. Q: Explain “money beliefs”? Kingsbury: A money…

Too many financial products are far too complex. The pre-loaded cards that people give as gifts during the holidays are a multi-billion-dollar example. When buying these cards, it’s very hard to know what you’re getting and giving. The big things to watch out for are expiration dates and fees. This isn’t easy. The federal CARD Act of 2009 covers cards issued by retailers for purchases in their stores and cards issued by banks for use in many places. The law bars these gift cards from expiring for five years after their purchase. They must also maintain their full value for a year. But after the first year, the CARD Act permits one fee per month, and a $5 monthly f…

How are your retirement plans going? If you’re a conservative Generation Y investor, are you in the mainstream? Baby boomers, how many in your generation are planning to retire at the same age you do? Compare yourself with your peers in this cool interactive quiz developed by the Boston mutual fund company, Fidelity Investments. Click here to check it out. As you answer each question, you can compare yourself with your peer group’s answer to that same question, based on a prior survey for Fidelity by the polling company, Gfk. Your peer group is determined by your income and your generation – baby boomer, Generation X and Generation Y. Fidelity also provides useful information and tips with each question. ……

The natural reaction to losing a job is to get a new one.  But when older people become unemployed, some view it as a dilemma: look for work or just retire? The presence of a financial safety net significantly increases the likelihood that an older, unemployed person will retire.  And that decision often comes quickly after they lose their job, concluded a new study by Matt Rutledge, an economist for the Center for Retirement Research, which supports this blog. “The brevity of [their] jobless spells suggests that older individuals have little tolerance for a job search” and will “make a quick exit” if they have financial resources backing them up, Rutledge wrote in a recent summary of his research. His…

Boston trust attorney Michael Puzo has seen it time and again: people procrastinate about writing a will or putting their estate in order. “It forces them to face their mortality, and they don’t want to,” he said. Even those with modest assets – a house, a 401k, and maybe a life insurance policy – should carefully make an estate plan.  But are the nuts and bolts of wills and estate planning widely understood? This question loomed as Puzo translated these legal complexities in a way anyone could grasp during his presentation to employees of Boston College, where Squared Away is based.  For readers who may not know where to start, here are 10 fundamentals gleaned from his talk: A good…

Thank you readers for continuing to support our blog, which was recognized this week by Jean Chatzky of AARP. We’ll return next Tuesday with more coverage of financial behavior…