Posts Tagged "baby boomers"

Wyoming Retirement Education on Point

Wyoming government has brought some 535 employees of the state’s executive, legislative and judicial branches into its retirement savings plan since July 2015 under a new policy of automatically enrolling each new hire.

They are free to withdraw from the plan at any time, but only 15 of the 535 have done so – “and not a complaint from anybody,” said Polly Scott, who manages the savings plan and heads employee retirement education.

This technique, borrowed from behavioral economics, addresses the inertia that prevents many people from ever signing up to save in their employer’s plan.  So why wait for them to join? Instead, Wyoming uses inertia to benefit state workers: when people are automatically enrolled, research shows, they tend to stay put and save.

This is one piece of a larger effort to educate government workers about what’s required to properly prepare for retirement – and nudge them to do it.  The 457 retirement savings plan is crucial. Wyoming’s retired state workers receive Social Security, but the inflation adjustment in their traditional defined benefit pension has virtually been eliminated for the near future.  The 457 plan “is voluntary, but it’s not optional if you want a secure retirement,” Scott said.

The heart of the state’s education efforts is a website titled “Your Whole Story” that is on point and explains in clear language likely to benefit employees. Employees are encouraged to increase how much they’re already saving, resist the temptation to withdraw their savings prematurely, and prepare themselves for a long time in retirement in an era of increasing life expectancy.

This initiative is based on a campaign sponsored by the National Association of Government Defined Contribution Administrators (NAGDA) – Scott was NAGDA’s president last year – and designed by the National Association of Retirement Plan Participants.  Other states use some version of “Your Whole Story,” including the Missouri State Employees’ Retirement System and Montana Public Employee Retirement Administration.

One problem Wyoming is tackling is young adults who hurt their retirement prospects by withdrawing money from their 457 plans when they leave their state jobs, which “means they’re spending it,” Scott said. Another issue is that more older workers are rolling 457 savings over to private IRAs, which can have higher fees. …Learn More

Guy in front of chalkboard with equations

Your Social Security: 35 Years of Work

This blog is for a part-time Macy’s saleswoman and immigrant whom I met in a hospital waiting room – she’d never heard of Social Security.

It is also for a 22-year-old contingent worker I know who lacks steady employment and isn’t regularly accruing credit toward the Social Security pension he will probably need when he retires.

And it is for a 62-year-old eager to claim his benefit right away, possibly short-changing his retirement.

A substantial share of retirees would fall into poverty were it not for the Social Security program passed during the Great Depression.  It’s especially important for two groups of people to understand how Social Security calculates their pension benefits: young adults making employment decisions that will impact them decades from now and older people figuring out when to retire.

Yet research shows that many people do not know the basic workings of a program that is crucial to their financial security.

Steve Richardson, a Social Security official in Boston, holds regular seminars to explain the pension program to the public. “The first thing I ask is – before I say my name – ‘How many people in this room know how many years Social Security looks at to determine your pension payment?’

“Not many of them know it’s your high 35 years of earnings.”

To qualify for a pension benefit at all, a person must work full- or part-time for 40 quarters – a total of 10 years. That’s not a difficult hurdle for most to clear during decades in the labor force. What’s central is the size of your future benefit check, which is determined by your highest 35 years of indexed earnings, Richardson said – and that brings us to the math thing. …Learn More

Photo of mother and daughter

Women Often Quit Work to Help Parents

Here’s just some of the evidence of the enormity of the challenge of caring for our elderly parents:

  • One in three baby boomer women cares for an elderly parent.
  • Even if they work, these caregivers devote anywhere from eight to 30 hours per week to that parent.
  • The estimated value of informal senior care provided by family members approaches $500 billion in this country – or double the amount spent on formal, paid care.

Caring for an elderly parent is usually done with love or out of a feeling of familial obligation. But there are real costs to taking on this responsibility, which most often lands squarely on a daughter’s shoulders. These costs could come in the form of lost wages and employer health insurance or in sacrifices of future pay raises or promotions. It’s also more difficult for older women to find a new job if they drop out of the labor force to help an ailing parent.

According to preliminary findings in a new study that used 20 years of data, taking care of a parent does significantly reduce the chances that women in their early 50s to early 60s are working.  Interestingly, the number of hours devoted to caring for a family member do not seem to affect women’s decisions about whether or not to work (though the researchers plan to revisit this finding).

But Sean Fahle of the State University of New York in Buffalo and Kathleen McGarry of UCLA said caregivers “may simply leave a job in order to provide care.”  Their paper was part of a series presented at the National Bureau of Economic Research this summer. …
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Photo of an older couple

Wives Pay Price to Retire with Husbands

Wives like to retire around the same time as their older husbands – so they can play. But what a difference the baby boom generation has made.

For boomer wives, as members of the first generation of women to enter the U.S. labor force en masse, there can be a steep cost to leaving the labor force at a relatively young age to retire with an older husband. New research by Nicole Maestas of the Harvard Medical School bears out this logic.

It’s obvious that working wives can increase their earnings from work by resisting the urge to retire at a relatively young age. And married women generally earn much more, relative to their husbands, than in the past.

But, more often than their mothers and grandmothers, boomer wives can increase their own Social Security benefits by continuing to work.

To understand how this works, compare boomers with their grandmothers. Their grandmothers were probably housewives for most of their lives and worked sporadically or part-time. As a result, their husbands’ earnings determined the size of the spousal retirement benefits they received from Social Security.

The situation is very different for boomer wives, who often have worked enough to earn their own benefits and wouldn’t qualify for a spousal benefit. Social Security calculates their benefits, as they do for all workers, using the average of her highest 35 years of earnings. But here’s the rub: many boomer mothers still haven’t accumulated 35 years of substantial earnings, because they took some time off or worked part-time to raise children. …
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Illustration of different family types

Finances Change with US Family Structure

  • One out of every 10 Generation X mothers is single – many more than in the generation born during World War II.
  • Nearly two-thirds of single older people are the survivors of divorce – far more than in the past.
  • About one in three couples has moved away from their hometowns and from both of their mothers – blame this geographic mobility on the growing share of U.S. workers who are college educated.

These are just a few of the dramatic changes in U.S. family structure and behavior that have developed over the past half century.  These changes have had enormous financial consequences for everyone, especially women.

Squared Away has documented some of the financial impacts in previous blogs. A Lucky 7 such blogs, most of them based on studies by the Retirement Research Consortium, are summarized below (with links to each one):

  • Women are having babies five years later, on average, increasing their earnings substantially over their lifetimes.
  • About half of Americans don’t live near their mothers, creating new pressures for caregivers. This video explains who they are.
  • In the aftermath of divorce, many women figured out how to rebound in the labor force and earn more.
  • But when it comes to retirement preparedness, a doubling in the divorce rate since 1990 has put more baby boomers at a financial disadvantage.
  • Stepchildren, divorced parents, blended families – the structure of the parent-child relationship has grown more complex, and so have the parents’ wills. …

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Seniors Find an Affordable Haven

Mary Roby

The stress of living with her son and daughter-in-law made Mary Roby’s blood sugar spike. But when she began her search for an independent senior housing community, affordable and nice never seemed to come in the same package.

Roby, who is 80, said she looked around quite a bit. A one-room place in the Boston area for $4,500 a month had no senior services, a limited kitchen, and was housed in a poorly maintained building. She also knew, through her son’s in-laws, about a high-end assisted living community with extensive services, but it charged more than $6,000.

Then she found Shillman House, which was both affordable and nice. “I love it here,” Roby said about the independent senior housing community in Framingham, Mass. …Learn More

Two Shillman residents talking

Senior Housing a Remedy for Loneliness

After his wife of 36 years died from cancer, Dick St. Lawrence experienced something new: loneliness.

“Worst feeling in the world,” St. Lawrence, 81, said about Linda St. Lawrence’s death in the winter of 2014.

Like many widows and widowers before him, he had to build a new life for himself, despite having the comfort of a large family of four living children, six grandchildren and seven great-grandchildren. His first small step was accepting an invitation to play poker at Shillman House, an independent housing community for seniors owned and operated by Jewish Community Housing for the Elderly. The man who called to invite St. Lawrence knew a woman who used to play Mahjongg with Linda.

Next thing he knew, he’d sold their family home in Framingham, Mass., around the corner from Shillman House, and settled into one of its 150 apartments. Now he plays two poker games a week, works out at his old gym, and socializes with Shillman’s residents every evening in the dining room. At night, his Cairn terrier, Rusty, keeps him company during Red Sox games on television.

“I want to visit as long as I can,” Dick St. Lawrence jokes about his plan to spend his final days there.

The vast majority of baby boomers in an AARP survey said they want to age in their homes “as long as possible.”  But when the rubber meets the road – in old age – the elderly often learn that isolation is bad for their psyche and their health.

There are downsides even to living in a community for independent seniors, with the constant reminders of the vulnerabilities that come with aging. When a Shillman resident suddenly becomes ill and is driven away in an ambulance, dread quickly spreads among the residents that he or she might not be coming back.

Still, they say, the positives far outweigh the negatives. All in their 80s, the seniors interviewed have visibly slowed down but are still enjoying vigorous social lives. …Learn More

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