March 2016

Study: College Debt Hurts Retirement

College graduates learn very quickly that paying hundreds of dollars toward student loans each month makes it difficult to afford things like a nice apartment or a car.

But they might not appreciate the long-term consequences of their record levels of borrowing: college debt is an added threat to their retirement security, according to a new study by the Center for Retirement Research.

Chart: More Young Adults Today are in DebtThe researchers gauged the debt’s impact by looking down the road to retirement and projecting what would happen if working people of all ages had started out with the same profile as young adults: 55 percent of today’s 20-something households have student debt, and they owe $31,000, on average.

College debt has a bearing on retirement security through two avenues. First, money going into loan payments is not available for a retirement savings plan. Second, lenders place limits on how much total debt a homebuyer can have, forcing many borrowers to delay home purchases; and getting a home loan would be very hard for the 17 percent of student loan borrowers delinquent on their debt.

Based on these assumptions and using 2013 data, the Center’s National Retirement Risk Index shows that those at risk of a lower standard of living when they retire would increase sharply to about 56 percent of working U.S. households – compared with 52 percent at risk when the student loan projection isn’t figured into the NRRI calculation.

This “represents a substantial increase in the already alarming rate of households at risk,” said the Center, which supports this blog. …Learn More

Photo of apartment buildings

Rising Rents Slam the Middle Class

Chart: Renters are paying moreFirst it was the Irish, then Portuguese, then Brazilians – for more than 150 years, Somerville, Massachusetts, absorbed wave after wave of immigrants. Today, hipster professionals are pouring into this city next door to Boston.

Somerville rents have shot up as much as 50 percent in 15 years, and a two-bedroom apartment for under $2,000 in a shabby chic neighborhood is a rare find.

A similar trend is playing out all over the country – from Boston and Miami to Los Angeles and Seattle – and it’s squeezing working- and middle-class families the most, according to the Joint Center for Housing Studies at Harvard University. …Learn More

Photo of older woman on phone

Loneliest Seniors Vulnerable to Fraud

“Lost my husband to 9/11 terror attack” – using heartbreaking stories like these, a U.K. scam that became public last month persuaded some lonely older men to turn their money over to widows.

This report is a dramatic illustration of a relationship between loneliness and fraud that has been uncovered in recent research. That study found that people over 50 have been vulnerable to being victimized by fraud in recent years – but the prevalence of fraud was three times higher among people who are extremely depressed or lonely.

The 2013 study in the journal Clinical Gerontologist might be the first to examine financial exploitation from the point of view of psychological vulnerability. It was based on a general survey of older Americans that asks each participant if they’ve “been the victim of financial fraud in the past five years.”

The psychological survey questions pin down whether they suffer from depressive symptoms and whether their social needs are fulfilled. The social needs questions address loneliness and a lack of social affirmation, asking the survey’s respondents whether they “have people to turn to, people to talk to, people to feel close to” and are “part of a group” and “appreciated.” …Learn More

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