Stark Differences in U.S. Cost of Living

The Squared Away Blog’s focus is on how informed financial decisions can improve one’s personal finances or retirement prospects.  But much that impacts our standard of living is not in our control.

One example is the cost of consumer goods, healthcare, and renting or buying a home, which vary widely from one city or region to another.  To highlight this variation, the Tax Foundation in Washington, D.C., used recent data from the U.S. Bureau of Economic Analysis to create the cool interactive map below, which shows locations with the highest cost of living (bright orange) and the lowest (bright turquoise).

Running a cursor over the map displays metropolitan and rural areas and their comparative living costs, measured in terms of what $100 will purchase.  In the Manhattan-New Jersey area, for example, $100 buys the equivalent of about $82 worth of goods, healthcare and housing, while it will buy $119 worth of the same stuff in central Kansas.


Source: The Tax Foundation.

The least expensive city is Danville, Illinois, where $100 buys $126 in consumer goods, followed by Jefferson City, Missouri; Jackson, Tenn.; Jonesboro, Arkansas; and Rome, Georgia. The most expensive metropolitan areas are the usual suspects, in this order: Honolulu, Manhattan, Silicon Valley, the Bridgeport-Stamford, Connecticut, area outside Manhattan, and Santa Cruz, California, which is south of Silicon Valley.[A second map compares states.] …Learn More

South Has Highest Debt Collection Rate

It’s old news that working people in the South earn less than residents of thriving communities in California, the Northeast, the Upper Midwest and elsewhere.

What’s troubling is how many Southerners apparently can’t pay their bills.

West Virginia, North Carolina, Alabama, Kentucky, Texas – they’re among 13 states where more than four in 10 state residents’ credit card or other debts have been sent to collection agencies, according to a July report by the Urban Institute.

The report, based on data from the credit reporting firm TransUnion, provides insight into how many Americans continue to experience financial stress even though the recession is technically over.   The Urban Institute’s analysis doesn’t focus on mortgage debt, since delinquent home loans generally go into foreclosure and rarely to collections. Yet many of the Southern states were also hit harder by the housing market collapse than the nation as a whole. …Learn More

Best States for Growing Old

Minnesota, Washington, Oregon, Colorado, Alaska, Hawaii, Vermont, Wisconsin, California and Maine – these states may be the best places to grow old.

They came out on top in AARP’s new State Scorecard based on their access, cost and the quality of their care services for aging adults and on their supports for the most common form of caregiver – family members.

To see your state’s overall ranking, run your cursor over the map below. To see how your state ranks on other measures, click here.

Enid Kassner, an AARP vice president who helped developed the rankings, said the Scorecard is useful to the leading edge of the baby boom generation, who will start turning 80 in 12 years. For example, if having a say in selecting the individual professional who will provide care, such as bathing, dressing, or meals, is the top priority, California is the best place to be. …Learn More

Government Workers See COLA Cuts

State and local government workers have long felt their pensions were more secure than the vanishing pension coverage in the private sector.  But a spate of changes to cost-of-living protections should give them pause.

In the wake of the Great Recession, 17 states reduced, suspended, or eliminated cost-of-living increases (COLAs) in their defined benefit pensions for state and local workers, according to a recent summary of legislative actions around the country by the Center for Retirement Research, which sponsors this blog.  And the courts are backing them up, deciding that the inflation protections – a fixture of the majority of public pensions – do not have the same constitutional or other legal protections that apply to core benefits.

The COLA changes, enacted to reduce government pension liabilities, generally affect both current retirees’ benefits and the future retirement benefits of active employees.

The above map shows where the cuts have occurred.  The following is a summary of the specific change in each state: …

Pay Gap: Depends on Woman’s Age

The earnings gap between working men and women has narrowed somewhat over time, but it’s considerably wider for older women.

Women who are now on the cusp of retirement and working full-time earn 67.5 cents for every dollar men their age earn – or 8 cents more than working women who were the same age (in their late 50s and early 60s) during the 1970s.

For younger women, the pay gap persists but things are brighter.  Women in their late 20s and early 30s today earn 84 cents for every dollar a young man earns.  That’s a 20 cent gain over women who were their age back in 1970.

These are among the myriad statistics documenting the history of the pay gap in the new (7th) edition of the economics textbook, “Economics of Women, Men, and Work.”

The pay gap affects women’s ability to save, buy a house, and invest.  There are several explanations for why younger women have made more progress, relative to men, say the textbooks’ authors, Francine Blau, Anne Winkler, and Marianne Ferber: …
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Marching to Retirement Without a Plan

401k participation chartOnly about half of all U.S. workers in the private sector participate in retirement savings plans at their current places of employment, according to a new report by the Center for Retirement Research.

Pension coverage in this country “remains a serious problem,” concludes the Center, which also sponsors this blog.

The goal of the Center’s report is to make sense of the myriad estimates of how many Americans are covered at work. One prominent source of data is the federal government’s survey of employers, the National Compensation Survey. The NCS shows that 78 percent of full-time workers, ages 25 through 64, have some type of defined benefit or defined contribution plan available to them at work.

But that’s the rosiest way to slice the data.

The share of employees who are covered slides to 48 percent when public-sector, often unionized, workers are stripped out of the NCS; when part-time, private-sector workers are added in; and when one counts only the share who actually participate in an employer plan when it’s offered to them. …Learn More

1 in 4 Seniors Have Little Home Equity

Chart: Home equity held by Medicare beneficiariesRetirees can use the equity sitting in their homes to pay for their daily expenses, out-of-pocket medical bills or nursing care, especially toward the end of their lives.

Cash-strapped older retirees can access that equity by taking out reverse mortgages or home equity loans or by downsizing to less expensive homes or condominiums.

But one in four Medicare recipients has less than $12,250 in home equity, according to a new report by the Kaiser Family Foundation, a healthcare non-profit.

Kaiser’s calculations also show that the distribution of home equity among older Americans is – like the distribution of income and financial assets – top heavy.  While 5 percent of Medicare beneficiaries in 2013 had more than $398,500 in home equity, half have less than $66,700.

According to Kaiser’s projections, that gap will widen in the future. By 2030, those whose home equity places them in the top 5 percent will see that equity grow more than 40 percent, but it will rise less than 10 percent for those with mid-level – or median – amounts of equity.

The analysis was part of a study to examine the ability of older Americans to absorb rising out-of-pocket retiree medical costs and increasing Medicare premiums.  This blog also reported the study’s similarly grim findings about the meager financial savings held by many retirees to cover their health care costs.Learn More

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