Posts Tagged "financial"

2 heads in illustration

Why Couples Retire Together – or Don’t

Married couples don’t necessarily know what the other spouse is thinking about retirement.

This insight came out of a new Fidelity Investments survey that asked some 1,600 people if they knew when their significant other planned to retire. Only 43 percent answered the question correctly. This disconnect reveals just how few couples are talking about retirement, said Fidelity spokesman Ted Mitchell, who worked on the survey.

Fidelity’s survey went out to adults of all ages, so the younger ones no doubt felt they’re too young to be thinking – much less talking – about what their lives will be like decades from now.

But things change as couples age. When retirement comes into sharper focus, it’s natural to start talking through the options – mine, yours, and ours.

One option is to retire around the same time, and prior research has shown that roughly half of older couples do so.

New research takes a more nuanced look at how couples retire and finds a more complicated picture.  Mixed arrangements are common in the pre-retirement years. Perhaps one spouse continues working full-time, even though their partner has retired, or one spouse might shift down to part-time work while the other is either still in a full-time job or has already retired.

Two sentiments are usually in conflict when older workers are trying to decide whether to retire: a longing for more leisure time and a need to bank more in savings, Social Security, and pensions.

Spouses often influence one another’s retirements for a variety of reasons, including their health, their relative ages, and how much each one likes their job. But financial security is usually a major consideration. …Learn More

Woman looking at mountains

A Proposal to Reduce Widows’ Poverty

A dramatic decline in widow’s poverty over a quarter century has been a positive outcome of more women going to college and moving into the labor force.

Bar graph showing percentage of povertyYet 15 percent of widows are still poor – three times the poverty rate for married women.

A new study by the Center for Retirement Research takes a fresh look at Social Security’s widow benefits and finds that increasing them “could be a well-targeted way” to further reduce poverty.

Widows are vulnerable to being poor for several reasons. The main reason is that the income coming into a household declines when the husband dies.  The number of Social Security checks drops from two to one, and any employer pension the husband received is reduced, or even eliminated if the couple didn’t opt for the pension’s joint-and-survivor annuity.

While one person can live more cheaply than two, the drop in income for new widows often isn’t accompanied by a commensurate drop in expenses.

Another issue begins to develop as much as 10 years before a husband dies. Prior to his death, his declining health may increase the couple’s medical expenses and reduce his ability to work, depleting the couple’s – and ultimately the widow’s – resources.

The irony today for wives who worked is that their decades in the labor force generally improve their financial prospects when they become widowed. Yet, under Social Security’s longstanding design, they receive less generous benefits than housewives – relative to the household’s benefits prior to the husband’s death. …Learn More

Gears

Longevity Affects Social Security Benefit

It’s long been known that people with high earnings tend to live longer than low earners. But this gap in life expectancy has widened into a gulf.

For example, high-earning men born back in 1912 lived about eight months longer than their counterparts in the bottom half of the income range. This longevity gap increased to five years for men who were born in 1941 and are now in their late 70s. The disparity for women is similar, but not as extreme.

This growing longevity gap has important implications for Social Security. The program’s intent is to be progressive – more generous to lower-income retirees.  But the unequal life spans have significantly reduced that progressivity, concludes Matt Rutledge in a new synopsis of research in this area for the Center for Retirement Research, which sponsors this blog.

The reason low-income workers are losing ground is that they don’t live as long, so they don’t collect Social Security for as many years as high-income workers do.

A study by the National Academy of Sciences, one of several demonstrating the decline in the program’s progressivity, found that the value of lifetime Social Security benefits, adjusted for inflation, increased nearly 30 percent for the highest-income retirees born in 1960, compared with the top earners born 30 years earlier. But benefits either fell or stagnated over that time for retirees on the lowest two tiers of the income scale – the people who rely far more on Social Security. …Learn More

Medicaid Expansion Reduces Unpaid Debt

One in five Americans is burdened by unpaid medical bills that have been sent to a collection agency. Medical debt is the most common type of debt in collections.

This burden falls hardest on lower-paid people, who have little money to spare between paychecks.  These are the same people the 2014 Medicaid expansion under the Affordable Care Act (ACA) was designed to help.  Some 6.5 million additional low-income workers were getting insurance coverage just two years after Medicaid’s expansion, which increased the program’s income ceiling for eligibility in the states that chose to adopt the expansion.

mapThe evidence mounts that this major policy has improved the precarious finances of vulnerable households.

A new study of the regions of the country with the largest percentage of low-income residents found that putting more people on Medicaid has reduced the number of unpaid bills of all kinds that go to collection agencies and cut by $1,000 the amounts that individuals had in collections.

The impact in states that did not expand Medicaid is apparent in Urban Institute data. Five of the 10 states with the highest share of residents owing money for medical bills – North Carolina, South Carolina, Oklahoma, Tennessee and Texas – decided against expanding their Medicaid-covered populations under the ACA option. About one in four of their residents have medical debt in collections.

That’s in contrast to Minnesota, which has one of the most generous Medicaid programs in the country and the lowest rate of medical debt collection of any state (3 percent of residents), said Urban Institute economist Signe-Mary McKernan.

“Past due medical debt is a big problem,” she said.  “When [people] have high-quality health care, it makes a difference not only in their physical health but in their financial health.” …
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