Man sitting in a store thinking

Spending Cut When Job Threats Rise

A new study provides important insights into American workers’ household budgets.

The study found that when workers sensed a growing likelihood they might lose their jobs, they quickly pared their spending on a large and diverse basket of discretionary consumer goods. These included both standard purchases and big-ticket items, from gardening supplies and vacations to cars and dishwashers.

The analysis was based on a survey of some 2,500 workers who were asked about their spending patterns and also asked to estimate their own chances of becoming unemployed over the coming year. The survey was conducted between 2009 and 2013, when the U.S. jobless rate at one point approached 10 percent. …Learn More

Where We Live: the Mom Magnet

Despite the growing tendency of Americans to migrate around the country for a job or retirement, half of all adults still live less than 25 miles from their mothers.

Such details about basic family living patterns were described in this video featuring Janice Compton, an economist with the University of Manitoba, who conducts research on the relationship between geographic proximity to older parents and who cares for them.

The vast majority of hands-on caregivers are family members. And elderly women, who tend to live longer than men, are more often the ones who receive care from their children.

To determine who’s most likely to stay near mom – and be in a position to assume care-giving duties – Compton and Robert Pollak at Washington University analyzed data from the U.S. Census and the National Survey of Families and Households for adults over age 25. Here’s what they found: …Learn More

Cross roads image between work and retirement

Half Say Retirement Saving Is Top Goal

Half of all American adults view their top financial goal as making sure they have enough money to retire, finds a survey conducted in early April and released last week by the National Endowment for Financial Education (NEFE).

That’s barely changed from 47 percent who said so in NEFE’s 2011 survey. These figures are unimpressive if one considers that most everyone eventually retires. Further, fewer than one in five U.S. workers has the luxury of a traditional defined benefit plan that will send them a pension check every month.

Saving for retirement hasn’t gotten any easier either: two of three adults in the NEFE survey identified an inability to save enough as a major financial obstacle. That sentiment may be one reason why only about half of private-sector U.S. workers participate in a retirement savings plan at work. …Learn More

Pay Gap: Depends on Woman’s Age

The earnings gap between working men and women has narrowed somewhat over time, but it’s considerably wider for older women.

Women who are now on the cusp of retirement and working full-time earn 67.5 cents for every dollar men their age earn – or 8 cents more than working women who were the same age (in their late 50s and early 60s) during the 1970s.

For younger women, the pay gap persists but things are brighter.  Women in their late 20s and early 30s today earn 84 cents for every dollar a young man earns.  That’s a 20 cent gain over women who were their age back in 1970.

These are among the myriad statistics documenting the history of the pay gap in the new (7th) edition of the economics textbook, “Economics of Women, Men, and Work.”

The pay gap affects women’s ability to save, buy a house, and invest.  There are several explanations for why younger women have made more progress, relative to men, say the textbooks’ authors, Francine Blau, Anne Winkler, and Marianne Ferber: …
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Should a Will Even the Score?

Consider this difficult situation: An elderly woman lends her oldest son $20,000 to help pay for some expensive medical care for his teenage son – her grandson – who’s stricken with cancer.

When the woman writes her will, a different son who is also her executor – and happens to be an accountant – advises her to deduct the $20,000 loan, never repaid, from the oldest son’s modest inheritance.

This happened in my family, and I was of two minds at the time.  Technically, the money was a loan – not a gift – so not paying it back was unfair to the other siblings who didn’t receive $20,000. But it seemed uncompassionate to take the money out of a bequest, given the graveness of the teenager’s illness.

Financial planner Rick Kahler discusses a similar situation in this video and proposes something that may seem radical: evenly dividing up your estate isn’t necessarily fair.

The way Kahler explains his argument in the video, it makes sense – at least in the particular instance he’s discussing.  But does it depend on the situation? …Learn More

Job Quality Matters

The nation’s job market regained some of its momentum in March.  But it’s not just getting a job that’s key to gaining financial security – it’s about getting and keeping a quality job.
Quote about disability insurance

In a recent report, the Institute on Assets and Social Policy at Brandeis University used interviews with workers around the country to identify three aspects of a job – beyond the size of the paycheck – that help people save money and bolster their financial security.  [Excerpts from some of the interviews are shown.]

The report also gave some indications of how common it is for workers to go without them:

Quote about health insuranceBenefits – Employer health care, disability insurance, a 401(k) retirement plan with an employer savings match, tuition credits – these benefits help workers save more, shield them against risk, and protect their paychecks by subsidizing some living costs.  But the service sector, one of the largest segments of the U.S. labor force, is particularly poor in providing such benefits.

Flexibility – Without sick days and similar arrangements, workers risk losing their jobs due to an illness or unanticipated event. …Learn More

Social Security 101

As a young adult starting my career in Chicago in the 1980s, I didn’t have a clue how Social Security worked or why money was being taken out of my scrawny paycheck.

But trust me on this: the Social Security retirement program becomes a lot more interesting to workers as they age and their retirement horizon comes into sharp focus.  It affects just about every American – and most of us pay into it.

It is not only the bedrock of retirement for millions of Americans and their spouses, but it’s also a source of income for their survivors, including children, and workers who become disabled.

In this video, officials from the U.S. Social Security Administration explain what its programs do and why they matter. Learn More

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