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Burdensome Rents are “the New Normal”

apartment rents chartDuring Boston’s mayoral election in November, Mayor Marty Walsh boasted that his administration has overseen $100 million in housing investment. Walsh’s challenger, City Councilor Tito Jackson, responded that this new investment has been dominated by the luxury apartments and condominiums sprouting downtown and around GE’s new headquarters in the booming Seaport neighborhood.

Walsh retained his seat, but Boston’s housing debate is playing out from Orlando to Austin to San Francisco.

“The lack of affordable rental housing is a consequence of not only increases in the number of lower-income households but also steeply rising development costs,” Harvard University’s Joint Center for Housing Studies concluded in its annual report on the nation’s housing stock.

An unprecedented 1 million new renters have come into the market annually since 2010, the center said, fueled by well-heeled older couples and young professional couples with children pouring into luxury apartments and the single-family homes that are on the rental market.

Building has slowed more recently, but not before strong demand had driven up the typical U.S. apartment rent by 27 percent, to $1,480, between 2011 and 2016. And $1,100-plus apartments leaped from one-third of the rental market to two-thirds; all rents were adjusted for inflation.

A decline in available apartments renting for under $850 are depriving working-class families of options. “[O]nce-affordable units have become out of reach for lower-income households,” the report said. …Learn More

New Yorker Cartoon Considers 401(k)s

New Yorker cartoonThis New Yorker cartoon by Trevor Spaulding is cute, but – spoiler alert – it’s not quite right.

A company offering a 401(k) retirement savings plan to its workers is a good thing, but it’s no “favor,” noted my long-time editor Steve Sass, an economist with a hawk eye for inaccurate retirement information. Setting up and funding a 401(k) is a big expense for employers. But many think it is worthwhile, because 401(k)s – and, more so, employers’ matching contributions – help them attract and retain the sharpest, most productive, or most-skilled workers.

Another employer calculation is that the income tax deduction employees get for saving, which costs the employer nothing, is especially valuable for those on the payroll who earn the most money and, by definition, pay more taxes.  It’s a neat outcome that the tax deduction most helps those presumably doing the most for the bottom line, though the government does limit how much highly compensated employees can contribute based on how much the rank-and-file workers are contributing.

But, it’s no fun to criticize a cartoon!Learn More


Baker’s Dozen: Popular Retirement Blogs

Appropriately, the most popular blogs over the past six months were about retirement, among both the young adults looking ahead to it and the later baby boomers heading toward it.

Based on page view counts, here were the most-read blogs on Squared Away during the last six months of 2017:

Retirement Calculators: 3 Good Options

Why Many Retirees Choose Medigap

Reverse Mortgage: Yes or No?

Why Most Elderly Pay No Federal Tax

The 411 on Roth vs Regular 401ks

Medicare Advantage Shopping: 10 RulesLearn More


Happy Holidays

However you celebrate, we wish you a wonderful holiday season and coming new year – from the staff here at the Squared Away blog at Boston College.Learn More

No Longer Homeless at Christmas

Lenny Higginbottom

A social worker hands Lenny Higginbottom, 52, the keys to a 378-square-foot apartment, the first home of his own after 24 years on the streets.

“Try to fight the tears,” he says, gripping the keys during a video accompanying a story by Boston public radio (WBUR) reporter Lynn Jolicoeur. “Something I thought I’d never be able to do,” Higginbottom says.

His past issues are not uncommon among the homeless: a father who died when he was six, depression, substance abuse, and a failed marriage. He had a Section 8 housing voucher but couldn’t find a landlord willing to rent to him due to minor criminal activity in his past. …Learn More

Federal Taxes Have a Good Side Too

This Donald Duck cartoon, funded by the U.S. government in 1943, urged Americans to pay their income taxes to support the war effort. Paying taxes was a patriotic act, to build up the inventory of war planes and battleships to defeat the Nazis – “sink the Axis!” the narrator bellows.

Nobody liked paying taxes then, and they still don’t. Yet there was a growing awareness as the war played out in the 1940s that taxes – like saving your scrap metal – were necessary to advance the greater good.

Things are different today. There doesn’t seem to be as much room in the public conversation for the benefits that federal taxes bestow, such as Social Security, Medicare, Medicaid (nursing home funding) and the Part D prescription drug benefit for retirees, or for government investments in education, roads, and research – or about who would suffer more if deprived of these benefits.

“Most people who do in fact receive significant forms of economic security from the federal government don’t know it,” argued Molly Michelmore, an economic historian at Washington and Lee University, in a recent interview on New York public radio. …Learn More

Financial Videos’ Message: Please Deal

Reflecting a lofty ambition to educate Delaware residents about financial management, state government officials put together some terrific videos.

This is not high-level finance – the speakers tell stories about real people facing up to the dimensional challenges of money and retirement.  Viewers outside Delaware might find one of the 10 online Tedx talks valuable to them. Here are three:

Javier Torrijos, assistant director of construction, Delaware Department of Transportation:
His take on the immigrant experience in a nutshell: “The parents’ sacrifice equals the children’s future,” said Torrijos, who has two sons and whose own father left Columbia for a tough neighborhood in Brooklyn, New York, in 1964 so his children would have a shot at escaping poverty. Today’s immigrants are no different. But the pervasive ethos of family above all else, he argues, is responsible for some of the Latino immigrant community’s financial instability.

When required to make the impossible choice between going to college or straight to work to support family, family usually wins. “That mentality still exists” but needs to change if Latinos are to improve their lot, he said. …Learn More