Woman stretching

Quiz: Financial Well-being or Unease?

What does it mean to have a sense of financial well-being? Or what does it mean to have its opposite, financial uneasiness?

Based on in-depth interviews with dozens of people in focus groups, the federal Consumer Financial Protection Bureau has developed a financial well-being quiz. The quiz is the agency’s attempt to quantify a very subjective concept so that researchers can measure it and integrate this measure into their research, said Genevieve Melford, a senior research analyst for the CFPB.

“It’s about creating a tool that allows meaningful research and effective interventions that might help people,” she said.

We think regular people can also gain personal insight by taking a short version of the CFPB’s quiz on this blog. After taking the quiz, write down your score, and return to the blog to learn what it means.

Button linking to quiz
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Older woman at computer

The Secret to Longer Life: Keep Working

If having an adequate income in retirement won’t persuade you to delay that retirement date by a year or two, try this argument: you’ll live longer.

A new study in the Journal of Epidemiology and Community Health found strong evidence that older workers who retire even one year later have lower mortality rates.  This held true for both healthy and unhealthy people.

The researchers at Oregon State and Colorado State used a survey of older workers to follow some 3,000 people who were employed in 1992 but had retired by 2010.  Since health drives mortality and is a factor in deciding when to retire, they separated their research subjects into two groups – healthy and unhealthy – to see if they had different results.

The healthy people were more likely to be physically active, non-smokers with a lower body mass index and fewer chronic medical conditions.  Other research has shown that having meaningful work can also contribute to health at older ages.

Over the period of the study, one in four unhealthy retirees died, compared with just about one in 10 healthy people. But the survival odds improved for people in both groups who retired after age 65, reducing the risk of healthy people dying by 11 percent and unhealthy people by 9 percent for each year of delay.

These general results aren’t necessarily true of every individual worker: some people are in such stressful or physically demanding jobs that retirement might be good for their health. Further, the reasons behind the health benefits of a longer working life are not fully understood. …Learn More

Contingent Labor Force Growing Fast

Most workers quickly realize that the best solution to low earnings in a job with scant or non-existent benefits is to move on to something better.

But this is increasingly difficult to pull off, because technology and other powerful forces are reshaping the 21st century economy – and degrading the quality of the jobs that are available.  As companies seek to cut labor costs, technologies like scheduling software for retail and fast-food workers and platforms like Uber and Task Rabbit are making it easier to do.

Chart: Alternative WorkThe result has been a rapidly growing contingent labor force of temp-agency workers, freelancers, independent contractors, workers for contract companies, and on-call workers with unpredictable schedules, according to a recent study by prominent Harvard and Princeton economists.  They estimate that this contingent labor force has increased from 10 percent of all U.S. workers in 2005 to nearly 16 percent today.  Its growth effectively accounts for all of the net job gains over the past decade.

The transformation under way is so apparent that it has earned nicknames like the “gig,” “sharing,” or “on-demand” economy.  The resulting jobs are often touted as giving workers flexibility and the freedom to earn more money – and sometimes they do.  The researchers conducted their own survey of more than 3,800 contingent workers, and business consultants and computer engineers might be good examples of the independent contractors and freelancers who said in the survey that they prefer their arrangements to working for someone else. …Learn More

Friends at dinner

5 Ways Millennials Mess Up With Money

The harsh reality is that you aren’t earning as much money as you think you are, and you don’t have as much to spend as you think you do – so it’s easy to let spending get out of control.

Gallup chartAndrea Woroch, only 34 years old herself, delivers some tough love to those who’ve already developed poor spending habits. A personal finance expert for the Millennial generation, Woroch said a perilous time is between the cash-strapped period right after college and the time when the steady, but modest, paychecks start flowing.

Early on, she explained, the attitude was “Okay, let me go to happy hour on this day because I can get $1 tacos and a beer. Now it’s okay to spend $20 for dinner. But that adds up, and they end up spending even more.”

Millennials polled by Gallup said they prefer saving to spending.  But Woroch, in an interview, provided five harsh observations about the obstacles to saving that she’s observed among young adults – including her husband, when they started dating:

  • You eat out all the time. Rightly, socializing is a big part of life. Eating out is also part of a larger trend: in March, consumer spending on dining out surpassed grocery store sales for the first time. Woroch advises that “spending money at the grocery store will help you spend less on food and leave room in your budget to put towards your savings goals.” …

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To Escape Stress, Some Workers Retire

Call it the “fed-up factor” – the uncomfortable circumstances at work that spur some older people to retire, sometimes prematurely.

Squared Away’s readers recently shared their personal experiences in comments posted to a blog post about three job characteristics, identified by researchers, that are linked to earlier retirements: stress, inflexibility, and increasing demands.

Working in the healthcare field has had unique stresses – at high levels – for one reader, Elin Zander, a dietician. Stress “is experienced by clinicians trying to provide quality care in an ever more difficult environment,” she said. “That is why I will retire as soon as I can afford to.”

Paul Brustowicz and his wife both retired to remove themselves from uncomfortable situations – her retirement was to relieve her stress from working as a manager in the demanding healthcare field. As for Brustowicz, “an abrupt change in management with a supervisor who treated me like a newcomer changed by mind,” he said.  He had planned to work until 68 but didn’t make it to 67 in his non-managerial job as a training professional for a life insurance company.

John Schmidt’s stress came in working as a high-tech consultant after 30 years in the field – though not for obvious reasons. …Learn More

Housing, Health Are 1/2 of Elderly’s Costs

How will your spending change once you retire? Will you be able to afford your needs? Will healthcare drain your budget?

The U.S. Bureau of Labor Statistics (BLS) provides some clues in its data on the spending patterns of older Americans. The pie charts below show the percentage of total household budgets in 2014 that went to everything from housing to entertainment for two older age groups.

The two age groups selected highlight how spending changes between one’s final years in the labor force (ages 55-64) and retirement (the over-75 group). (Note: a household’s age is determined by the age of the individual who responded to the survey.)

pies

The pie charts tell part of the story. Here’s what the BLS report adds to our understanding of spending among older Americans:

  • Housing. Nearly 70 percent of elderly homeowners over age 75 have paid off their mortgages, while only a third in the 55-64 group have. But there are other costs associated with homeownership, such as maintenance. And a large minority of older people are renters. The upshot: housing gobbles up about one-third of older households’ yearly budgets, regardless of their age.
  • Healthcare. The share of the 75-plus elderly population’s total spending that goes toward health care (15.6 percent) is nearly double that of the younger group (8.8 percent). … 

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Stress illustration

Stress is One Reason People Retire

Only about half of U.S. workers in their late 50s can be expected to remain employed at age 63, and less than a third make it past 65.

New research looks below the surface of these broad trends to reveal the role that the specific characteristics of individual occupations play in whether baby boomers can work longer.

It’s very common for people unexpectedly hit with health problems or blue-collar workers facing up to their physical limitations to retire earlier. On the other hand, older people in some jobs have good odds of working longer. A new study by researchers from the University of Michigan and the Rand Corporation uncovered three characteristics that promote working longer that exist in a variety of jobs: low stress, stable job demands and duties, and the ability to transition to part-time work.

The researchers used a survey of full-time workers over time, starting when they were 51 years old, to see when they retired. Their analysis then linked the workers to a separate database of job skills and characteristics to uncover specific jobs that led to earlier retirements (before age 63) or later retirements (after 65).

Research has consistently shown a strong tendency for high-stress work to push people out the door earlier – one example that emerged from this study is licensed practical nurses, who are on the front lines in challenging medical situations. A related finding is that people retiring after 65 are often in “creative or labor-of-love” jobs,” such as writers, musicians, social workers, clergy, and college professors. This is indirectly tied to stress, which is often mitigated by a love of one’s work. …Learn More

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