Aging, but Oblivious

Older people often wonder why young adults get tattoos that they’ll later want to remove.

In this Ted video, psychologist Dan Gilbert says tattoos are a good example of a universal error in thinking. …

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Depression Up After Pension Benefits Cut

Sudden changes in older workers’ financial expectations for retirement can cause depression, according to a 2011 study.

The study, which came out of the Netherlands, suggests that cuts in Dutch pensions, announced on very short notice, produced feelings of differential treatment and a loss of control that increased the incidence of depression among the workers who were adversely affected.

Workers were tested for depression two years after a 2006 pension reform reduced the share of their salaries replaced by the government-mandated defined benefit pension plans provided by employers.

Workers born in 1950 and after suddenly learned their “replacement rate” – the percent of pay the pension replaces – would drop to 64 percent, from the 70 percent initially promised.  Everyone born before 1950 was unaffected.  To replace the lost benefits, workers facing the cut would either have to save substantially more or work an additional 13 months. …Learn More

Government Workers See COLA Cuts

State and local government workers have long felt their pensions were more secure than the vanishing pension coverage in the private sector.  But a spate of changes to cost-of-living protections should give them pause.

In the wake of the Great Recession, 17 states reduced, suspended, or eliminated cost-of-living increases (COLAs) in their defined benefit pensions for state and local workers, according to a recent summary of legislative actions around the country by the Center for Retirement Research, which sponsors this blog.  And the courts are backing them up, deciding that the inflation protections – a fixture of the majority of public pensions – do not have the same constitutional or other legal protections that apply to core benefits.

The COLA changes, enacted to reduce government pension liabilities, generally affect both current retirees’ benefits and the future retirement benefits of active employees.

The above map shows where the cuts have occurred.  The following is a summary of the specific change in each state: …

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Social Security at 62 but Fairly Healthy

Are people who claim their Social Security retirement benefits when they’re 62 too sick or impaired to work?

Fast forward three years, to when these early claimers turn 65.  They’re about as healthy as those who decided to wait until age 65 to start receiving their Social Security retirement benefits, according to preliminary findings from a study using Medicare spending data as a proxy for health.  The early claimers are also far healthier than people who left the labor force early to go on federal disability.

Some 8,500 older Americans were in the study’s sample, and they fell into four different groups: those who claimed a reduced Social Security pension soon after turning 62; those who claimed a larger pension at 65; those who were awarded a Social Security disability benefit before turning 62; and those who applied for disability but were denied and then claimed their retirement benefit after age 62. …Learn More

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Test Yourself for Dementia

Dementia is a critical personal finance issue when so much is at stake in managing, investing, and spending one’s lifetime savings.  But one study found that, in the vast majority of older couples, the person in charge of managing the household finances continues to do so after dementia sets in.

Dementia can be difficult to perceive in oneself or a spouse or parent, because changes are usually so gradual, psychologists say.

Individuals can now get a rough assessment of their own or a loved one’s cognitive abilities with a test posted on the website of Ohio State University’s Wexner Medical Center in Columbus. Spokeswoman Elaine Scahill said more than 900,000 people have downloaded the test since it went online in mid-January as a public service.

The test, appropriately named SAGE – for Self-Administered Gerocognitive Exam – is similar to others used by mental health professionals as an initial screen; another one is the Montreal Cognitive Assessment. …

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Photo of an elderly woman and a nurse

Long-Term Care: Winging It

Americans have a very good chance of entering a long-term care facility. New research at the Center for Retirement Research, which sponsors this blog, finds that 44 percent of older men and 58 percent of older women will likely enter such a facility for at least a short stay.

Only 29 percent of adults age 40 and over, however, are “extremely” or “very” confident they’ll have enough resources to pay for such care, or for other types of care they may need in old age, according to a survey by the Associated Press-NORC Center for Public Affairs Research, an independent survey organization based at the University of Chicago.

The AP-NORC poll also revealed that people are poorly informed about how much care will cost if they need it.

They tend to underestimate how much nursing homes cost (about $6,900 a month) and overestimate the cost of a part-time aide coming to their home to help with personal care such as cooking or bathing (about $1,150 a month); their estimates about the cost of assisted living facilities (about $3,400 a month) were either too high or too low.

An additional complication, according to Jennifer Benz, NORC’s senior research scientist, is that “people don’t understand how the financing of long-term care works in the U.S.” The distinct roles of Medicare and Medicaid, in particular, caused great confusion. …Learn More

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More Plan Funerals Than Plan Elder Care

More adults are planning their funerals than are making arrangements for care in their final years of life.

That’s among the revealing findings about how Americans grapple with the inevitabilities of old age in an annual survey about U.S. attitudes toward long-term care. More than 1,400 adults were surveyed in March and April by the Associated Press-NORC Center for Public Affairs Research. (NORC is a social science research organization affiliated with the University of Chicago.)

“Experts believe that, like any other long-term financial planning, long-term care planning is the kind of thing you should get started with as soon as possible,” said Jennifer Benz, a senior research scientist for AP-NORC. But for many people, “it’s not even on their radar,” she said.

Nearly two out of three adults over age 40 said they have discussed funeral plans with family or others they trust, and more than half have also created a so-called advanced directive specifying how they would like their medical care to be handled if they become incapacitated.

While death and mortal illness are on people’s minds, there’s scant thinking about their long-term care arrangements. More than two-thirds reported they have done “little or no planning” for how they’ll be cared for in old age. …Learn More

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