Birds on a wire

Older Workers’ Job Changes a Step Down

When older workers change occupations, many of them move into a lower-status version of the work they’ve done for years, according to a new study by University of Michigan researchers who tracked the workers’ movements among some 200 different occupations.

Aging computer scientists were likely to become programmers or computer support staff.  And veteran high school teachers started tutoring, financial managers transitioned to bookkeepers, and office supervisors became secretaries.

Late-career transitions need to be put into some context: a majority of Americans who were still working in their 60s were in the same occupations they held at age 55, the study found.  And these occupations ran the gamut from clergy to life scientists to cooks.

Interestingly, while teachers, thanks to their defined benefit pensions, often retire relatively young, primary and high school teachers were also at the top of the list of older workers who have remained in one occupation into their 60s, along with radiology technicians and bus drivers.

But about 40 percent of Americans who were still working when they turned 62 had moved to a new occupation sometime after age 55, according to the researchers, who tracked individual workers’ employment changes using the federal government’s coding system. …Learn More

Kids playing

Black America’s New Retirement Issue

Black American homeowners chartThe retirement issues facing black Americans can’t necessarily be lumped together for many reasons – there are high- and low-income blacks, and there are recent immigrants as well as longstanding families.  A similar problem arises when treating the U.S. Hispanic-American population or the Asian-American population as a homogenous group.

Having acknowledged this, however, some recent studies have highlighted the financial challenges particular to each group.  For Hispanic-Americans, a major issue is that they live a long time but have low participation in employer retirement plans. For Asian-Americans, extremely high wealth inequality in their working population spills over into retirement inequality.

This blog looks at the recent erosion in homeownership among black Americans since 2000, which threatens to further undermine their retirement security – Generation X is most at risk.

Black workers’ relatively low incomes are probably the first challenge of saving for retirement. In 2015, the typical black family earned $36,898, substantially less than the $63,000 earned by white families, according to the U.S. Census Bureau.  Not surprisingly, their participation in employer retirement plans was also lower in a 2009 study, even though white and black Americans have roughly similar access to 401(k) plans through their employers. More than 77 percent of whites with this option save in a 401(k), and only 70 percent of blacks do.

Homeownership is also crucial to building wealth for retirement: the largest asset most older Americans possess is their house. This asset can translate into additional disposable income if the mortgage is paid off.  Retirees can also downsize to a smaller home or take out a reverse mortgage loan that doesn’t have to be repaid until the homeowner moves out or dies.

The problem for black Americans is that homeownership is going in the wrong direction. …
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Sticky note

The Benefits of Late-career Job Changes

Finding a new job in one’s 50s is not that easy to pull off, and it’s risky if the new employer doesn’t work out.  But there’s a silver lining for people who can make the change to a job they feel is better: they work longer than those who don’t make a move.

A new study by the Center for Retirement Research, which supports this blog, finds the probability that older workers remain in the labor force until they’re 65 increases considerably – by 9 percentage points – if they voluntarily made a job change sometime during their 50s.

This lends credence to other research showing that when older workers voluntarily find a new employer, they often experience more job satisfaction and less on-the-job stress, which makes it easier to resist retiring.

The benefits from changing jobs are both psychic and practical. …Learn More

Students Get Curious About Retiring

“I thought I was going to live forever.”

“I would’ve probably put more money away for later years.”

“I was a stay-at-home mom for 17 years, and I didn’t realize that during those years I wasn’t working I wasn’t accruing Social Security.”

Millennials asked what it’s like to be retired, and seniors answered in this video produced by The New York Times.

The video’s point, it seems, is that it’s not natural for 20-somethings to think about old age at all. “Retirement wasn’t in my vocabulary,” as one senior recalled about being young.

That’s why young adults, as soon as they enter the work world, should force themselves to make friends with a concept far in their futures – and then act on it. And here’s why: saving is more important than it has ever been, because they will carry much more of the burden of financing their retirement than their parents and grandparents ever did.

Even young adults who are paying off student loans should, at minimum, contribute enough to their savings plan at work to qualify for their employer’s matching contribution. Those who don’t plan ahead face a reliance on Social Security’s eroding benefits when they’re in old age, benefits that are the absolute bedrock of our retirement system but not enough for most retirees to continue the standard of living they had while they were working.

If you need convincing, listen to these retirees talk about how difficult it is to live solely on Social Security in the video below produced by Squared Away in 2012: …Learn More

illustration of guy parachuting

A Modest Victory in Financial Education

With so many Americans in the dark about how to prepare for retirement, educating them about why it’s critical to save seems an obvious way to tackle this problem. But very few solid studies prove that financial education actually works.

This field research should be counted as a positive result for a modest, low-cost financial education program.

Carly Urban at Montana State found that tellers and other low-level employees working at 45 randomly selected credit unions around the country clearly made progress after spending just 10 hours in an online financial education program. The information-based program required the workers to do some reading and walked them through specific examples and scenarios they might face.

Their improvements weren’t limited to increasing their knowledge of finances and retirement saving either. They also saved more, Urban said while presenting her findings at a webinar sponsored by the Center for Financial Security at the University of Wisconsin.

In the fall of 2009, the credit union employees completed the online education on the basics of everything from financial planning and investment risk to saving for college and working with a financial adviser. They were allowed to choose how much time to spend on each of 10 modules, and their employers let them take the courses at work – rather than use up valuable free time. …Learn More

1 in 3 Can Barely Afford Medical Care

More American Are Worried About Healthcare CostsMore Americans have health insurance, but they’ve also become increasingly worried over the past two years about how to pay for every aspect of their medical care.

While the majority of insured adults still can afford their health care, the minority who say it’s “difficult” to pay their monthly premiums, doctor and prescription copayments, and deductibles is growing.

Potential explanations for these concerns, revealed in a new Henry J. Kaiser Family Foundation poll, include rapidly rising prescription drug costs and the fact that employer-provided health insurance plans with high deductibles are far more common than they used to be.

To be sure, the Affordable Care Act (ACA) has expanded Americans’ access to health insurance, and federal subsidies have made the premiums more affordable for millions of previously uninsured workers, who now purchase coverage through the ACA’s state health exchanges.  But the program hasn’t eliminated concerns about cost. …Learn More

False teeth

Get Dental Work Before You Retire

Caps, gum surgeries, implants, dental exotica – all kinds of things can and do go wrong in retirees’ mouths.

But dental coverage also drops sharply for older Americans, because when people retire, they give up their employer’s dental insurance. Without it, retirees needing dental work can face an unexpected, mini financial crisis.

Medicare does not cover routine dental procedures, a fact that a majority of working baby boomers are unaware of. But most seniors also aren’t covered through a spouse or under, say, a union dental insurance plan for retirees. The private dental insurance market is their only option for care, and very few purchase it.

Uninsured older Americans shell out $1,126 annually, on average, for dental work, which is $400 more than people with coverage spend. Out-of-pocket costs can be much higher in a year when extensive work is required. …Learn More

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