August 24, 2017
Outsized Caregiving Duties for the Few
The value of the informal care provided to the nation’s elderly, often by adult children, exceeds $500 billion a year – more than double the price tag for the formal care of nursing homes and home health aides.
Only 6 percent of Americans are, at any given time, regularly helping parents who have deteriorating health or disabilities to perform their routine daily activities (and 17 percent will provide this care sometime during their lifetime). But a sliver of the population shoulders an inordinate amount of responsibility.
A study by Gal Wettstein and Alice Zulkarnain of the Center for Retirement Research finds that the
6 percent of adults providing parental care devote an average 77 hours to their duties each month, or roughly the equivalent of a full-time job for two weeks.
And the burden grows as adult offspring get older. They found that 12 percent of 70-year-olds are caring for parents and spend, on average, 95 hours per month doing so, even though they’ve reached an age when they might be developing health issues of their own. This remarkable situation is no doubt a result of both rising life expectancies for the elderly parents and improving health among their offspring, who are also aging but are nevertheless still able to provide care.
The study was based on data from a survey of older Americans that used the standard definition of care, which includes helping seniors with activities of daily living (known as ADLs), such as bathing, eating, and walking across a room, and includes instrumental activities of daily living (IADLs), such as taking medications, cooking, and managing finances.
For the half of seniors over 85 who require this assistance, informal family care is their first choice. Not surprisingly, nearly two-thirds of this care is done by spouses and daughters, especially unmarried daughters. But there are costs, in terms of money and work, as well as time. Caregivers report that they spend more than one-third of their budgets on parental care. …Learn More
August 22, 2017
The U.S. Labor Participation Problem
The superlatives come fast and furious in the spate of reports coming out on the dwindling participation in the labor force by Americans still in their prime working years.
- The fall in men’s participation in the United States has been going on for decades but has been steeper here than in all but two advanced economies (Israel and Italy) in recent years. “We have won the race to the bottom,” says Nicholas Eberstadt, an American Enterprise Institute scholar and author of “Men Without Work: America’s Invisible Crisis.”
- A more recent drop in labor force participation for American women is “unique” – in the rest of the developed world, women’s participation continues to rise, according to a Brookings Institution report.
- Men with no more than a high school degree make up 40 percent of workers but 60 percent of those who have dropped out of the U.S. labor force.
- The decline in participation has been steepest among men without a high school education, particularly black men.
Economists count not only working people as being in the labor force but also people who are trying to find a job. Something is amiss when millions of Americans in their prime – between ages 25 and 54 – are doing neither, especially in a strong economy like the United States is experiencing now.
This issue is not new, but the election has brought it front and center. Also, the prolonged decline in men’s labor force participation had been partly masked by increasing women’s participation, which pulled up the aggregate figures. Now that women have begun withdrawing, the trend has become increasingly obvious – and ominous.
The Brookings and AEI scholars offer myriad, often overlapping, explanations for why this is happening: …Learn More
August 17, 2017
Behind Asian-Americans’ Wealth Divide
When it comes to wealth, Asian-Americans aren’t much different than whites. The typical household’s net worth is around $133,000 in each group, and about 10 percent have no wealth at all.
And like white America, Asian-American inequality is high and rising. Asian-Americans ranking in the top 10 percent (in terms of their wealth levels) have $1.45 million in savings and home equity – about 170 times more than those in the bottom 20 percent. In the 1990s, the top 10 percent had 75 times more wealth.
Given this high concentration of wealth, “many Asian Americans, especially Asian American seniors who need to live off of their savings, live in an economically precarious situation,” according to a Center for American Progress study in December. The Urban Institute in a newer study concluded that “Asian American seniors are often left out of the national conversation on poverty.”
A deeper analysis reveals the dynamics at work in this rapidly growing and diverse socioeconomic group.
The timing of immigration is key to socioeconomic status. The Japanese, who came to this country in large numbers in the early 1900s, have had plenty of time to improve their lot. A new report by the Federal Reserve Bank of San Francisco, focused on the Los Angeles area, found that people of Japanese descent are, by far, the wealthiest segment of the Asian community there. Remarkably, the median household’s net worth approached $600,000 in 2014.
Immigration from Korea, by contrast, didn’t pick up steam until the 1980s and 1990s. Not surprisingly, the typical Korean household lags behind, with about $25,000 in wealth. But that could be changing: one in five Koreans owns a business, the highest rate of business ownership for Asians in the Los Angeles area.
Inequality also emerges between generations in upwardly mobile Asian-American families. …
August 15, 2017
Women Spending Fewer Years in Marriage
It took months for one girlfriend’s suitor to persuade her to get married. Another of my friends skipped marriage entirely and had two children on her own. Others married, had kids, and divorced, a status that seems unlikely to change for some as they age. I married for the first time at 56.
These anecdotes, about a random group of baby boomer women in the Boston area, illustrate some of the ways that women over the past half century have dramatically reduced the time they spend as part of a married couple.
A new study being released today by the Center for Retirement Research at Boston College finds that “middle boomer” women born in the late 1950s can expect to spend no more than half of their adult lives (starting at age 20) in marriage. That share was closer to three-fourths for the mothers of baby boomers.
The researchers measured this dramatic change and its underlying causes – namely delayed wedlock, permanent singlehood, and divorce – across four cohorts of women who participated in a survey of older Americans.
Between the oldest group (born in 1931-41) and the youngest group (born in 1954-59), the average age of first marriage has increased by nearly three years, while the share of women who have never married tripled to 12 percent. The share who’ve divorced also rose, from one-third to one half, according to the center, which sponsors this blog.
The change has been even starker for black women: the share of their adult lives spent in marriage declined from 54 percent of the oldest group to just 32 percent of middle boomers. Divorce is a contributing factor, but the primary reason is that black women are much more likely to fall into the “not married” category than in the past. In fact, the not married group is now larger than the married group.
This trend has many implications, not the least of which are financial. …
August 10, 2017
Beach Reads for and about Old Folks
Who wants to spend their beach vacation reading about growing older? These recommendations just might surprise you.
“The Accomplished Guest” by Ann Beattie
Ann Beattie’s 1983 book of short stories, “The Burning House,” explored the drift, emotional detachment, and cynicism of boomers, whose worldview was darkened by Watergate. That book made Beattie’s reputation, and she has been prolific ever since, including regular appearances in The New Yorker. Her 2017 short story volume, “The Accomplished Guest,” is, for now, a bookend to “The Burning House” (Beattie is only 69 and no doubt has more books in her). While baby boom skepticism remains a central theme, her characters have developed a little heart and sentimentality over the years. I particularly liked “Company,” about an older couple entertaining newlyweds at their Maine summer house (one advantage of getting older). All night, Henry ruminates about his death. But as this glorious summer evening draws to a close, he finds reason to celebrate his friendship with the much younger Jackson. Jackson is still decades away from facing his own mortality, but tonight, they are “just two men – you know, any two men – passing time on the back porch.”
“Can’t We Talk About Something More Pleasant?” by Roz Chast
For months, I ignored raving recommendations about Roz Chast’s book on how she navigated her parents’ old age. I should not have. This book by the long-time New Yorker cartoonist is a poignant, laugh-out-loud funny examination of the guilt, love, memories, regrets, anger, and tenderness that churn inside adult children carrying their parents through the final stages of their lives. …Learn More
August 8, 2017
401k Saving Harder at Lower Incomes
Our 401(k) retirement system doesn’t work as well for lower- and middle-income workers as it does for those at the top.
That’s because they face more severe headwinds in pursuit of their retirement goals, concludes a new study.
Consider what happens when a worker’s earnings drop 10 percent or he experiences a bout of unemployment. These episodes are more common among lower-paid workers, and when they hit, they hit their 401(k)s harder than the 401(k)s of people who earn more, according to the study, “Defined Contribution Wealth Inequality.”
In theory, 401(k)s could work for everyone – if everyone had access to an employer savings plan (which they don’t). And while people who earn more money obviously have more to sock away in their retirement plans at work, smaller paychecks aren’t necessarily a problem either.
The key to retirement for any worker is whether he or she has saved enough, along with Social Security, to cover about 75 percent of what they earned at work during the years leading up to their retirement. It’s true that lower-paid workers can’t save as much, but less could still be enough to reach their more modest retirement goals.
But earnings declines, unemployment, smaller employer contributions, and unwise investment choices – these “barely affect earners in the top 10 percent of the earnings distribution but are associated with less DC [defined contribution] wealth accumulation for those at the bottom,” concluded the researchers, Joelle Saad-Lessler at the Stevens Institute of Technology and Teresa Ghilarducci and Gayle Reznik at the New School for Social Research.
This disparity, they argue, has increased the retirement wealth gap in this country. In the post-recession period 2009-2011, for example, more high-income workers saw their DC account balances increase than did workers in the bottom half.
The researchers tracked the same people over time in two groups – the bottom 55 percent of the earnings ladder and the top 10 percent. They were able to more precisely compare each group’s ability to save for retirement by using the actual earnings and employer contributions to individual workers’ retirement plans. Here are their other findings: …Learn More
August 3, 2017
Reverse Mortgage: Yes or No?
The older people who either consider a reverse mortgage or actually get one don’t have much else to fall back on. Their primary assets – outside of their homes – are a car worth no more than $7,000 and about $2,000 in a checking account.
This was one salient fact unearthed about reverse mortgage users – or people who’ve looked into them – in a 2014-2015 survey led by Stephanie Moulton at Ohio State University. This supports a later study by Moulton that found that people who take out the loans tend to be in worse shape financially than other homeowners. The survey provides a more complete picture of who is turning to reverse mortgages – and why other people find alternatives to solve their financial issues.
Federally insured reverse mortgages, known as Home Equity Conversion Mortgages, or HECMs, allow homeowners over age 62 to borrow against their often-substantial home equity. These loans do not have to be paid back until the older homeowners sell the house or die.
Despite these attractive financial features, reverse mortgages are not popular: fewer than 60,000 were sold in 2015. Many elderly homeowners are appropriately wary of a complex financial product. The fees and interest rates are also higher than on a standard mortgage. But the idea behind HECMs is to allow cash-strapped seniors either to pay off their existing mortgages, eliminating house payments, or to create a readily accessible pool of cash or a new source of monthly income. Either way, they free up money that retirees can use to meet their expenses, emergencies, or medical bills.
The researchers interviewed some 1,800 older households after they had received the counseling required under federal law to apply for a HECM reverse mortgage. About two-thirds of those counseled proceeded with the loans, and one-third decided against it. Here’s what these two groups look like: …Learn More