College Funds Depend on Family Income

How much teenagers must borrow for college often depends on whether their parents can help foot the bill – and how much they can afford.

Fresh data from a survey by Sallie Mae, the private college lender, shed light on how low-, middle- and high-income families find the money to pay for a college education. The data break down how much of students’ total costs – tuition, plus books, room and board, fees, living expenses, and transportation – come from earnings, savings, borrowing, grants or other sources.

Chart

Here’s what stands out in the data, which are displayed in this chart:

  • In low-income families, the students themselves take responsibility for saving, earning or borrowing money to cover 32 percent of their costs, and middle-income students pay 29 percent. Students from high-income families cover just 19 percent of their costs; they tend to pay more for their education, so their total dollar costs are higher, which somewhat narrows the dollar difference between what students in each income group pay. …

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3 1/2 star illustration

Home Health Agencies Get Ratings

The Centers for Medicare & Medicaid Services just introduced a five-star rating system for home health agencies on its Medicare.gov website.

The ratings, based on patient surveys, were rolled out on the heels of recent upgrades to the government’s nursing home ratings, which had been criticized for giving high ratings to some facilities with problems.

Consumers can search, by area code, for home health agencies, or they can look up specific agencies that they’ve heard about or seen in the neighborhood.  (Some agencies listed on the website are unrated.)

Separately, Kaiser Health News also culled the government ratings to compile its own list of the lowest- and highest-ranked agencies for many states.   But according to Medicare.gov, most agencies “fall ‘in the middle’ with 3 or 3½ stars.” …Learn More

Jared Diamond: Elderly Have “Low Status”

Celebrated scholar Jared Diamond doesn’t mince words in exploring “the low status of the elderly in the United States” in the above Ted video.

An obvious example is beer, which older people are known to buy and consume. Yet, Diamond asks, “When’s the last time you saw a beer ad that depicts smiling people 85 years old? Never.”

Diamond, who is himself closing in on 80, has developed many specialties – traditional societies, geography, evolutionary biology, and physiology (to name a few) – which give him license to paint with a broad brush, as he did in his Pulitzer Prize-winning, “Guns, Germs, and Steel: The Fates of Human Societies.”

His sobering lecture on the elderly ends on a positive note as he describes their gifts – wisdom, knowledge of history, and skills refined over decades – and how society might better use them.

But the neglect, isolation, and abandonment of the elderly, or worse, he explains, are not new. They were present in some early traditional societies that could not care for them or would not spare the resources to do so. The isolation of older Americans today, Diamond believes, is a direct consequence of the changes that have come to define modern societies: the elderly’s complete separation from the labor force in retirement, the geographic dispersion of families and friends, and technology.

Even Diamond admits to feelings of uselessness. He’s a whiz on the slide rule, the precursor to a calculator, but sometimes calls his son for assistance using his 41-button television remote. …Learn More

Woman in a yoga pose

Saving Is a Lot Like Yoga

Young people in the noon yoga classes here at Boston College bend, twist, or flatten themselves more easily than their much older classmates.

But older people are better savers – 50-year-olds save at more than double the rate of 40-year-olds – and perhaps yoga can explain how this happens.

In yoga, one doesn’t immediately balance into Warrior III without toppling over or find the upper-body strength for the Crow pose shown above. It takes practice to build the balance, strength, focus, or flexibility that each pose requires. Only with time do these pretzel-like configurations become less painful and more convincing. Poorly executed poses, practiced and repeatedly improved, are the only path to perfection.

Like yoga, saving is also a practice. …Learn More

Social Security poster

Misconceptions About Social Security

It is the most important source of retirement income for most workers. Yet too many older Americans lack a basic understanding of certain aspects of Social Security benefits.

In fairness, many people got some key questions right in a survey that quizzed them about the program’s rules and incentives. But a significant minority, and sometimes a majority, revealed a poor understanding of several major features of the program. As the researchers note, misunderstanding Social Security benefits could lead to poor financial decisions about retirement.

They analyzed responses by more than 2,300 people – all between ages 50 and 70 – to a nationally representative survey administered online in 2008. The survey, which took about half an hour, started with basic demographic questions before moving to various questions about components of the Social Security program.

Brief explanations of some program features appear below, followed by the percentage of survey respondents who provided incorrect answers, according to the researcher’s analysis of the results:

  • The U.S. Social Security Administration calculates pensions using a formula based on the average of a worker’s 35 highest years of earnings. This information is important, because each additional year of work could substitute current earnings for an early year of low earnings – or even zero earnings prior to the worker’s entry into the labor force.

68 percent were incorrect in their responses to a multiple choice question that included the correct calculation as one of four options.

  • A married person who has never worked is eligible for a pension equal to half of her spouse’s “full retirement age” benefit if the non-working spouse claims at her own full retirement age, and a reduced benefit if she claims earlier. …

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Avoid Medicare Enrollment Mistakes

Mistakes made during initial Medicare enrollment can be costly.

Someone with on-the-job health care coverage who enrolls at age 65 may be paying Medicare premiums unnecessarily. Even worse, retirees who sign up too late incur a penalty for life.

“If you’re actively working, that’s the only reason you can enroll late in Medicare” without paying the penalty, Medicare trainer Andy Tartella says in the above video, “The ABCD’s of Medicare,” produced by the Centers for Medicare and Medicaid Services (CMS), an agency of the U.S. Department of Health and Human Services.

Medicare has been around for exactly 50 years. But enrolling in the program is a new experience for every single American who turns 65.   To navigate Medicare enrollment and the alphabet soup of Medicare programs, the following are other video tutorials produced by the federal government and other reliable sources – links are embedded at the end of the title: …Learn More

Rainbow rope tied in a knot.

Financial Bonus of (Same-Sex) Marriage

Two important U.S. Supreme Court decisions in two years removed not only the obstacles to same-sex marriage but also most of the financial inequities couples faced.

The June decision upholding same-sex marriage opened up financial advantages of marriage that either had been completely unavailable to gay and lesbian couples or were complicated by marrying in a different state than the state in which they live. The decision came on the heels of the high court’s 2013 ruling against sections of the federal Defense of Marriage Act, a ruling that made Social Security benefits available to gay and lesbian couples in states that permitted them to marry.

In the wake of these decisions, “If marriage is an option and it makes sense emotionally for the couple, that’s also the best financial strategy,” said Sheryl Garrett, a certified financial planner in Eureka Springs, Arkansas.

There are disadvantages to marrying.  Filing joint tax returns can mean higher income taxes or less financial aid for college-bound offspring. Nevertheless, Garrett, co-author of “Money without Matrimony: The Unmarried Couple’s Guide to Financial Security,” said the court rulings together make a compelling argument for marrying.

She provided Squared Away with five financial benefits of same-sex marriage listed below. They’re the same advantages that were always available to heterosexual couples who could produce a marriage license. …Learn More