Boomer Men’s Lifetime Earnings Lower

The first study known to look at changes over several decades in lifetime earnings for the nation’s workers shows a dramatic trend: women are up and men are down.

The oldest people studied, mostly men, began working in the 1950s, when the post-war U.S. economy was going full throttle, and they started retiring in the 1980s when the industrial economy was only in the early stages of a protracted decline. The youngest workers studied are “middle” baby boomers, who came of age during the twin 1980s recessions in heavy industry and experienced the rise of the service economy and two high-tech booms and busts.

Over this time period, men’s earnings went through two distinct phases.  In the first phase – which spanned the working lives of men born in 1932 through 1941 – the typical man’s lifetime earnings, adjusted for inflation, saw a 12 percent increase, the researchers found.

In the second phase, men’s lifetime earnings turned negative. Boomers born in 1958 have earned 10 percent less in total than men born in 1942. The decline is primarily due to men being paid less after accounting for inflation, and not from reductions in how many hours or how many years they worked, the analysis found.

In contrast, lifetime earnings for women born over the same 27-year period enjoyed “steady” and “broad-based” gains of 20 percent and 30 percent over the two sub-periods. …Learn More

Lesbian wedding

Gay Marriage: Income Gains Quantified

The U.S. Social Security Administration states on its website that it “is no longer prohibited from recognizing same-sex marriages for the purpose of determining entitlement to or eligibility for benefits.”

Numerous disadvantages faced historically by the nation’s 800,000 same-sex partners are falling away in the wake of the 2015 Supreme Court decision legalizing marriage – access to Social Security’s benefits for a worker’s same-sex spouse or widow is just one. The financial gains from legalized marriage should also increase substantially over time, as more gays and lesbians are drawn out of cohabitation and into married relationships.

new study, by Urban Institute researchers Karen E. Smith, Stephen Rose, and Damir Cosic, estimates that by 2065 same-sex couples 62 and older with low or mid-range earnings will have about $4,000 in additional net cash income every year. This includes earnings, Social Security and pension benefits, and investment income minus taxes, Medicare premiums and other government levies.

The $4,000 estimate per couple is based on the institute’s population model that simulates multiple financial impacts on U.S. households to arrive at the overall effect. It also takes into account that same-sex married couples will be better able to pool their resources in the future, share employer health benefits, buy a house, and withstand a spouse’s layoff.

A key benefit for older same-sex married couples is access to Social Security spousal and survivor benefits, which were unavailable before the law change. Social Security is especially significant if the spouses have sharply different earnings levels – just as they are to married heterosexual couples in which one spouse, usually the wife, has lower earnings and is eligible for a higher benefit based on her husband’s work history instead of her own. …Learn More

Kids playing

Black America’s New Retirement Issue

Black American homeowners chartThe retirement issues facing black Americans can’t necessarily be lumped together for many reasons – there are high- and low-income blacks, and there are recent immigrants as well as longstanding families.  A similar problem arises when treating the U.S. Hispanic-American population or the Asian-American population as a homogenous group.

Having acknowledged this, however, some recent studies have highlighted the financial challenges particular to each group.  For Hispanic-Americans, a major issue is that they live a long time but have low participation in employer retirement plans. For Asian-Americans, extremely high wealth inequality in their working population spills over into retirement inequality.

This blog looks at the recent erosion in homeownership among black Americans since 2000, which threatens to further undermine their retirement security – Generation X is most at risk.

Black workers’ relatively low incomes are probably the first challenge of saving for retirement. In 2015, the typical black family earned $36,898, substantially less than the $63,000 earned by white families, according to the U.S. Census Bureau.  Not surprisingly, their participation in employer retirement plans was also lower in a 2009 study, even though white and black Americans have roughly similar access to 401(k) plans through their employers. More than 77 percent of whites with this option save in a 401(k), and only 70 percent of blacks do.

Homeownership is also crucial to building wealth for retirement: the largest asset most older Americans possess is their house. This asset can translate into additional disposable income if the mortgage is paid off.  Retirees can also downsize to a smaller home or take out a reverse mortgage loan that doesn’t have to be repaid until the homeowner moves out or dies.

The problem for black Americans is that homeownership is going in the wrong direction. …
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1 in 3 Can Barely Afford Medical Care

More American Are Worried About Healthcare CostsMore Americans have health insurance, but they’ve also become increasingly worried over the past two years about how to pay for every aspect of their medical care.

While the majority of insured adults still can afford their health care, the minority who say it’s “difficult” to pay their monthly premiums, doctor and prescription copayments, and deductibles is growing.

Potential explanations for these concerns, revealed in a new Henry J. Kaiser Family Foundation poll, include rapidly rising prescription drug costs and the fact that employer-provided health insurance plans with high deductibles are far more common than they used to be.

To be sure, the Affordable Care Act (ACA) has expanded Americans’ access to health insurance, and federal subsidies have made the premiums more affordable for millions of previously uninsured workers, who now purchase coverage through the ACA’s state health exchanges.  But the program hasn’t eliminated concerns about cost. …Learn More

False teeth

Get Dental Work Before You Retire

Caps, gum surgeries, implants, dental exotica – all kinds of things can and do go wrong in retirees’ mouths.

But dental coverage also drops sharply for older Americans, because when people retire, they give up their employer’s dental insurance. Without it, retirees needing dental work can face an unexpected, mini financial crisis.

Medicare does not cover routine dental procedures, a fact that a majority of working baby boomers are unaware of. But most seniors also aren’t covered through a spouse or under, say, a union dental insurance plan for retirees. The private dental insurance market is their only option for care, and very few purchase it.

Uninsured older Americans shell out $1,126 annually, on average, for dental work, which is $400 more than people with coverage spend. Out-of-pocket costs can be much higher in a year when extensive work is required. …Learn More

emergency

Some Insured Workers Delay Healthcare

Stark differences are emerging in the ways that workers, depending on how much they earn, are using the medical services covered by their employer health plans.

While higher-income workers gravitate toward preventive and maintenance care, lower-wage workers visit emergency rooms far more often, according to a study published last month in Health Affairs.  The researchers pointed to one major culprit: a 67 percent increase in average deductibles for employer health plans since 2010.

Employers usually offer the same health plans to all their employees. But the growing prevalence of high-deductible plans could be making making some low-wage workers think twice before seeing a doctor if they’ll have to pay the entire bill because they haven’t hit their yearly deductibles yet. Health insurance premiums and other out-of-pocket medical costs in high-deductible plans together consumed about 21 percent of pretax earnings for the low-wage workers studied.

Many of these workers, apparently trying to contain their out-of-pocket costs, might “avoid or delay health care services, despite having coverage,” said the researchers.

They analyzed four employers that covered some 43,000 workers through a common private health insurance exchange in 2014.  The researchers adjusted the data so they could compare the employees, controlling for, among other things, health insurance plan design, deductible levels, employee characteristics, and the size of their households.

An analysis of insurance claims data found that lower-paid workers were more likely to see a doctor after medical problems develop, while higher-paid workers were more diligent about preventing problems.

For example, workers in the top two wage categories ($44,000-$70,000 and over $70,001) received preventive care during visits to the doctor’s office far more often than workers earning under $30,000.  Screenings for breast, cervical and colon cancer were also more frequent among high-paid employees, who also adhered more closely to the drug regimens prescribed by their doctors.

Not surprisingly, hospital admission rates for lower-wage workers were nearly double the rates of the highest-paid workers – and four times higher for avoidable medical problems that landed them in the hospital. Low-paid workers visited emergency rooms about three times more often.

There are many potential reasons for these differences, including low-paid workers’ generally lower education levels and less access to paid time off from work to see a doctor. But the researchers said financial constraints certainly played a role: …Learn More

A Bigger Bite Out of Social Security

Social Security chartMost retirees didn’t notice the $5 cost-of-living increase in the average Social Security check. That’s because the Part B Medicare premium deducted from their checks went up nearly as much (from $104.90 in 2016 to an average $109 this year).

Beyond premium hikes, the bigger issue for retirees are the additional out-of-pocket costs they must pay as part of their Part B coverage for doctor visits and outpatient care. When rapidly rising copayments are added to the basic premium, they together consumed more than 15 percent of the average Social Security benefit last year. That is more than double the percentage in 1980, and it’s expected to exceed 17 percent by 2030, according to the Centers for Medicare and Medicaid (CMS).

The CMS estimates were made prior to the announcements of 2017’s final COLA and Part B increases. But the trend of eroding benefits was confirmed by Juliette Cubanski, associate director of Medicare policy for the Henry J. Kaiser Family Foundation. …Learn More

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