Job satisfaction illustration

More Retirees Get Less Satisfaction

Figure: More Retirees Get Less SatisfactionIn the late 1990s, six out of ten retirees found retirement “very satisfying.” Today, not even half do, according to a recent analysis of a long-term survey of older Americans.

The news isn’t all bad, since the “moderately satisfied” share rose – and moderately satisfied is probably a more realistic goal for most people anyway.

But the question of why so few people are very satisfied with their retirement state of mind is difficult to pin down. The survey analysis by the Employee Benefit Research Institute (EBRI) and past academic research provide some clues.

Health.  It’s well-established that health and satisfaction are inextricably linked: healthier retirees are happier retirees, according to a 2005 study by the Center for Retirement Research, which supports this blog.  One reason health is important is that retirees who are healthy can remain active – bridge, golf, travel, volunteering, whatever – which brings satisfaction. …Learn More

Family holding hands

Medicare vs Medicaid in Nursing Homes

When a spouse or parent requires long-term care, quality is the top priority. But a report last year by the US Government Accountability Office (GAO) cited concerns about the quality of the federal data essential for monitoring the quality of care.  For example, three key indicators point to improvements: better nursing staff levels and clinical quality and fewer deficiencies in care that harm residents. Yet consumer complaints jumped 21 percent between 2005 and 2014, even though the number of nursing home beds has remained roughly flat in recent years.

Anthony Chicotel, an attorney with the San Francisco non-profit California Advocates for Nursing Home Reform, said care quality is intertwined with affordability, payment sources, and dramatic changes under way in nursing home economics.  For his views on this important topic, Squared Away interviewed Chicotel, who is also part of a national coalition of attorneys advocating for patient rights.

Question: Recent Boston Globe articles have highlighted substandard care at nursing home companies that allegedly sacrificed resident care quality for profits.  Are these a few bad actors or is this a larger problem?  

Problems exist in the traditional buyer-seller marketplace for nursing homes and long-term care services. Providers all get paid pretty much the same rate regardless of whether the care they provide is good or bad. It’s usually the government who’s paying, and they’ve got an imperfect monitoring system to make sure the rules are followed.

The bottom line is that dollars can be extracted from a for-profit facility that don’t go into patient care. What you sometimes see is a nursing home affiliated with a number of other companies that provide services to the nursing home at above-market rates. The same web of companies running the nursing home might be in charge of the linen supplies, medical equipment, therapy, and the above-market rents for the facilities. If they’re paying, say, $12,000 a month for linens instead of sending it to a non-affiliated company, and it costs only $7,000 per month to supply the linens, they’re making a $5,000 profit. I don’t think the government’s going to catch that or account for that money.

Q: Long-term care is so expensive – more than $6,000 per month, on average.  What are the top three financial issues that face nursing home patients and families? … Learn More

Personal Finance Videos Hit the Basics

These personal finance videos are like sensible shoes: they won’t win any awards, but they can be useful.

Produced by the College of Financial Planning, the short videos demystify the fundamentals of personal finance that the planners who teach and take courses at the college rely on in their practices.

  • “Free Money” (above) features Dirk Pantone, a vice president and certified financial planner, interviewing Kristen MacKenzie, who teaches there, about 401(k)s, 403(b)s, 457(b)s and the employer match.
  • “Living on Borrowed Time,” has Pantone and MacKenzie discussing the difference between good debt and bad debt, both of which impact credit scores.
  • “The Road to Investing Your Assets” explains why low fees and portfolio diversification are so important.

There are 13 videos.  Other topics covered include retirement, taxes, and financial literacy. To watch other videos, click here. …Learn More

Medicaid Expansion: Winners vs Losers

Low-income residents are in better financial shape in the 31 states that have expanded their Medicaid health coverage under the Affordable Care Act (ACA).

Medicaid expansion

That’s the bottom line in a new study finding that they have fewer unpaid bills being sent to collection agencies and their collection balances are $600 to $1,000 lower than their counterparts in non-expansion states. This contrasts with the years prior to the 2014 Medicaid reform, when residents of would-be expansion and non-expansion states had very similar financial profiles.

State decisions about whether or not to expand their Medicaid rolls are having “unambiguous” and “important financial impacts,” concluded researchers at the University of Michigan, the University of Illinois, and the Federal Reserve Bank of Chicago.

Medical crises are expensive for most workers but are virtually insurmountable for low-income Americans. The annual cost of care for someone hospitalized at some time during 2012, for example, was $25,000 – more than many low-wage workers earn in a year.

To address this risk, the ACA expanded Medicaid health coverage to more people and established a new income threshold to qualify at 138 percent of the federal poverty level – or about $16,000 for an individual. A U.S. Supreme Court decision later gave states the option of expanding their Medicaid programs.

The researchers’ findings were based on credit reporting data on 1.8 million individuals between 19 and 64 years old who are living below 138 percent of the federal poverty.  They analyzed the impact of Medicaid availability on non-medical debt, such as credit cards, in zip codes with the highest percentage of people under the threshold during 2014 and 2015.  [Mortgage debt was excluded.]

The purpose of health insurance is to provide a financial cushion by limiting the spike in out-of-pocket expenditures when a medical crisis strikes. For low-wage workers, this cushion takes the form of Medicaid.Learn More

Going Abroad? Is Currency a Work of Art?

As Squared Away readers scatter to the winds this summer, those going overseas should take a close look at the currencies in their travel destinations.

There are some gorgeous currencies out in the world, in places like Sao Tome & Principe off of the coast of Gabon in West Africa. June begins peak season for the island country, which The Lonely Planet says has a relaxed “leve leve” vibe to go with its miles of beaches, “swaths of emerald rainforest, soaring volcanic peaks and mellow fishing villages.”

Sao Tomean Dobra

Currency as art is a refreshing contrast to U.S. currencies, with their button-down images of presidents and buildings.  Try the red-billed kingfisher bird on Sao Tome & Principe’s 50,000 dobra – or the curved bow of the boat on Norway’s 100 kroner note.

These were among the currencies selected by the coupon website, Couponbox.com, for its recent spotlight on the world’s “10 most beautiful banknotes.”  To see the others, click here. …Learn More

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Array of Financial Products is Dizzying

Timeline of financial products since the 1940sRather than put his money in a bank, my cousin, who’s in his mid-40s, makes loans in $25 increments on a peer-to-peer lending website.  He decides on the amount of risk he’s willing to take on – and the riskier the borrowers he chooses, the more he earns on his “savings.”

My cousin’s $25 investments illustrate how much our consumer finance market has evolved over several decades. We all embrace the convenience. Car loans are a more affordable way to buy a vehicle, Internet banking lets homebuyers get several mortgage quotes at once, and paying with cell phones is much easier than paying with cash or even credit cards.

But all this innovation has a downside. One example is the change from installment credit with fixed payments in the early 1960s to revolving credit, which lets consumers choose to pay a small required minimum – and increases the high credit-card interest that undisciplined borrowers pay. A recent and egregious innovation is companies that purchased lawsuit settlements from victims of lead paint poisoning for a fraction of their value.  Both innovations offer convenience in exchange for personal financial impacts that are either excessive or difficult to recognize.

A primary outcome of all this financial innovation is that U.S. households “in aggregate have taken on greater risk,” conclude professors at the Harvard Business School in their 2010 paper, “A Brief Postwar History of US Consumer Finance.”  Consumers now have an enormous amount of latitude – arguably too much latitude – to borrow, shift assets, save for retirement (or not), play the markets, or engage in peer-to-peer lending, they say.

As a result, risks pervade our investment portfolios, savings and retirement accounts, borrowing decisions, and how we purchase consumer goods.  And that’s the problem. …Learn More

Birds

Find Best Job Market with Online Tool

This online tool for exploring urban job markets is very cool.

It could be a big help for high school and college graduates looking for work, especially those willing to migrate to a new city and trying to figure where to go. What’s unique about it is that it ranks the nation’s large, mid-sized, and small cities based on the user’s personal preferences.

To use the tool, created by the American Institute for Economic Research (AIER), the job hunter decides how high to rank the importance – from 5 (most important) to 1 (not important) – of nine different aspects of the job market and lifestyle in their ideal city: low unemployment, high average earnings, high labor force participation, public transportation, highly educated peers, low rent, high diversity, plentiful bars and restaurants, and many arts and entertainment options.

To test it, I selected a 5 for low unemployment and high labor force participation and a 1 for everything else (the bar scene, public transit, diversity etc.).  Cities like Minneapolis, Denver, Salt Lake City, and Austin came up as the best cities, when these two job-market criteria were most important.

AIER also compares different cities in a report, which is available here.

Of course, other things are important when relocating. But the tool forces job hunters to balance their priorities – a strong job market or a good bar scene?  To play around with AIER’s gadget, click here.Learn More

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