January 13, 2015
Americans Cope with Income Swings
A full-time job that delivers a steady paycheck, week in and week out, is a luxury for many working people.
Low- and middle-income adults are instead often whipsawed by wild swings in their incomes, finds a U.S. Financial Diaries project, based on detailed biweekly or monthly financial interviews with 235 urban and rural U.S. households nationwide. During the course of the year these interviews were conducted, the average household experienced four spikes or dips, defined as a change of at least 25 percent in their incomes.
The Bloomberg video above explains that even when workers’ annual incomes are sufficient to cover annual expenses, these month-to-month fluctuations complicate how – or whether – they can save for their future.
The income swings have many causes primarily stemming from the labor market, including unpredictable work schedules, unsteady part-time or self-employment, and a patchwork of multiple jobs, as well as a reliance on intermittent payments such as tax refunds. More than half of the adults interviewed – retail and construction workers, waitresses, check cashers, hotel workers, taxi drivers – held down more than two jobs. …Learn More
December 11, 2014
Widows Face More Financial Adversity
Two times more widows than widowers say their spouse’s death carried significant negative financial consequences during the first year after their loss.
This sharp contrast recurred in numerous financial questions recently posed to widows and widowers by New York Life. The contrast also seemed to persist across various income levels, in questions revolving around both essential needs and luxuries. Here’s a sampling of answers given by nearly 900 Americans whose spouses have died sometime in the past decade:
Their answers beg the question: Why the divergence?
One reason is certainly that two-thirds of the widows surveyed reported their income was under $35,000, while a majority of the widowers earned more than that. Adults over age 18 were canvassed, so working women’s lower earnings no doubt contributed to the income and lifestyle disparities.
Pension survivor policies also play a role, since two out of three of the people surveyed were over age 65. …Learn More
November 11, 2014
Paid Sick Time Wins on Ballots
In last Tuesday’s election, voters in Massachusetts and three cities – Oakland, California, and Montclair and Trenton, New Jersey – approved paid sick time initiatives that benefit working mothers in particular.
These election results come on the heels of a slew of similar initiatives approved in the past year covering all or certain groups of workers in California and in San Diego, Washington, DC; Eugene, Oregon; several New Jersey municipalities; and the Tacoma suburb of SeaTac, according to an inventory of sick time laws compiled by the advocacy group, A Better Balance.
Mandated paid sick time for employees is growing in popularity but is still unavailable to significant numbers of working mothers, who, the data show, are more often responsible for children’s health than fathers. This issue is one more thing that – like lower pay – can disadvantage single women struggling to secure their personal finances today or save for retirement in the future, especially low-income women.
Research by Usha Ranji, associate director of women’s health policy for the health care non-profit organization, the Kaiser Family Foundation, found that 39 percent of working moms are forced to miss work when a child is sick, because they don’t have back-up child care; of them, 60 percent do not get paid for that time – a decade ago, fewer than half of this group were in this position. …Learn More
October 16, 2014
U.S. Renters “Financially Fragile”
A new report by the FINRA Investor Education Foundation finds “a financially fragile renter population relative to homeowners.”
It’s hardly surprising that apartment dwellers who rent are worse off financially than homeowners. It takes money to buy a house. But things got markedly worse for renters after the Great Recession. Millions of homeowners, foreclosed on by their lenders, were thrown back into the market for apartments, driving up rental rates and squeezing all renters.
A new FINRA Foundation report, “American Renters and Financial Fragility,” dramatizes the growing rift between the nation’s haves and have-nots through a comparison of owners and renters.
Click on “Learn More” below to see a FINRA Foundation chart contrasting the personal financial situation for renters versus homeowners, based on a 2012 survey. The jobless rate has declined since then, but the rental market has only tightened. Rents have continually increased in recent years, reports Reis, a real estate tracking firm. And 85 percent of property managers nationwide reported they raised rents over the past year to capitalize on a decline in the number of vacant rental units, which continues in 2014, according to Rent.com. Housing costs in particular are becoming a burden for a growing numbers of older Americans. …Learn More
October 14, 2014
A Thriving Underground Money Culture
Recent immigrants – whether from Mexico, Africa or China – often form groups that regularly contribute to a pool of money. Group members then take turns pulling out $500 or $1,000 in accumulated cash.
These savings groups are one aspect of a pervasive underground money culture bustling beneath the surface in U.S. communities of immigrants and other low-income workers.
Savings groups are one of four types of “informal” financial arrangements identified in a new report, “An Invisible Finance Sector: How Households Use Financial Tools of Their Own Making.” These arrangements create a strong social commitment to saving typically absent in the formal U.S. banking system.
The four arrangements discussed in the report are:
- Savings groups, also known as lending circles, which are primarily found in immigrant communities.
- Interpersonal loans.
- Storing more than $100 in cash at home.
- Money guards who safeguard someone else’s savings. …
September 25, 2014
Seniors’ Housing Cost Burden on Rise
For a growing share of older Americans, housing expenses have become an increasingly large financial burden.
One in three Americans over age 50 were carrying a severe or moderate housing cost burden in 2012, up from one in four in 2000, according to a new study by Harvard’s Joint Center for Housing Studies and AARP. The Center defined a severe burden as housing costs that consume more than half of household income; a moderate housing burden takes between 30 percent and 50 percent of income.
The Center’s report, “Housing America’s Older Adults – Meeting the Needs of An Aging Population,” warns that the nation is unprepared for both the financial and non-financial housing challenges that will accompany the coming explosion in the elderly population. Aging baby boomers will require better access to public transit, handicap access, assisted living facilities and other special services and amenities, and many will need subsidized housing.
Housing is often an older person’s largest single expense. And because housing costs are largely fixed (think mortgage payment, taxes, insurance, upkeep and utilities), they can become a growing burden for people as they age and become more vulnerable to reductions in income. Incomes often decline toward the end of their working years and decline again when they enter retirement. Pensions and Social Security benefits fall again when one spouse dies.
The report finds that: …Learn More
August 28, 2014
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