Posts Tagged "psychology"

Woman at computer

Managing Money with Cognitive Decline

Despite the normal cognitive challenges that people in their 70s and 80s inevitably face, most are sharp enough to be in charge of their financial affairs or oversee them.

But the significant minority of seniors who do have trouble is explored in a new summary of the research by Anek Belbase and Geoffrey Sanzenbacher at the Center for Retirement Research, which supports this blog.

One such group is people learning for the first time how to carry out financial tasks. Widows, not surprisingly, are often required to negotiate this financial learning curve, which gets steeper as a senior’s ability to process new information erodes. With guidance from a family member or professional, however, the novices can usually figure things out.

Seniors with mild cognitive impairment might also develop problems. Mild impairment becomes fairly common by the time people reach their 70s, affecting their financial judgment and potentially their ability to manage their affairs in ways that promote their best interests.  Among those with mild impairment, 82 percent can independently handle the various financial tasks they face, such as paying bills, managing bank accounts, and maintaining good credit.  This compares with 95 percent of unimpaired seniors.

Another danger facing seniors with mild cognitive impairment is their vulnerability to fraud.  They are usually aware they’re slipping, yet they may remain confident about their ability to handle their financial affairs. …Learn More

The Late-1950s Boomers: Hit by Divorce

Middle Boomers chartIt’s old news that the many baby boomers who did not get married and stay married are worse off financially than those who did. Unfortunately, the financial damage to one segment of this generation has broken new ground.

Only 44 percent of “middle boomers” – those born in the late 1950s – have remained married to their original spouses, down from 52 percent of their parents’ generation. Middle boomers are also far more likely to have lived with partners without marrying, remained single all their lives, or even to have divorced twice.

The heart of a study is determining which of middle boomers’ choices were most likely to have led to financial distress when they reached their pre-retirement years.

About 11 percent of middle boomers had negative net worth by the time they were in their early 50s – more than double the share for the generation born during the Great Depression when they reached this age. Negative net worth means that middle boomers’ mortgages and other debts exceed the value of their assets; in this study, assets included everything from retirement plans and taxable bank accounts to primary and vacation homes.

To understand why, the researchers culled marital histories from a survey of older Americans. They found that four lifestyles are most strongly linked to middle boomers’ negative net worth: never marrying, going through one divorce and becoming single again, separating from a second marriage, and divorcing from a second marriage.

In all of these situations, the individuals were about three times more likely to have negative net worth than were the continually married middle boomers. The study controlled for age, gender, race, education, health, household income, and the number of offspring.

Middle boomers are the “least prepared for retirement” out of four groups studied, the researchers concluded, and their choices around marriage have been important contributing factors.Learn More

web of connections

Can Work Enhance Seniors’ Social Lives?

Callout boxMaintaining a network of family, friends, or even golfing buddies is critical to cognitive and physical health in old age, research has shown.

What wasn’t known is how work affects the social lives of older people. Does work foster social ties or limit the time one has to socialize?

A new study by Eleonora Patacchini at Cornell University and Gary Engelhardt at Syracuse University finds that those who continue to work have larger social networks.

They analyzed responses to the following question by more than 1,300 survey participants in the National Social Life, Health and Aging Project. The participants were ages 57 to 85 in 2005 and answered the following question then and again in 2010:

“Most people discuss things that are important to them with others. For example, these may include good or bad things that happen to you, problems you are having, or important concerns you may have. Looking back over the last 12 months, who are the people with whom you most often discussed things that were important to you?” …Learn More

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Financial Misinformation Shared Online

My mother sent an anxious email that included the above picture, which one of her elderly friends had emailed to her as a warning about coming tax increases.

“Have you seen this?” my mother asked in her email.

I’m glad she inquired, because it took 15 seconds to learn on factcheck.org that this misleading information has made the rounds on the Internet for three years in a row, updated to the new year – 2017 this time.

There are nuggets of truth in the misinformation above. The Medicare tax already increased as part of the Affordable Care Act. However, it applies only to employed couples earning more than $250,000 and employed individuals earning more than $200,000. The retirees living in my mother’s very modest senior community – and most working Americans – are not affected. Yet “shocking” information like this rears its head over and over again on Facebook, Twitter and other social media.

At a time that misinformation is deliberately being fabricated, and one such lie coursing through the Internet even spurred gun violence at a Washington, D.C., family pizza joint, it’s time to bring attention to false financial information that, unwittingly, people may be sharing online. …Learn More

Parent and child holding hands

Parents Pass (Bad) Money Habits to Kids

When people are asked why they are stressed, money – or the lack of it – is often at the top of the list.

Ask psychologists why this is so, and many would point to a deeper explanation: our parents.

How and whether our parents talked about money, as well as the emotional tenor of these conversations – or silences – are critical to how we manage money as adults.

Sonya Britt, a certified financial planner and associate professor at Kansas State University, explained how these family dynamics play out in a research summary written for financial planners, under a contract with the federal Consumer Financial Protection Bureau.

Britt describes a two-way street between parent and child.  Parents signal their attitudes about money, either through purposeful and explicit messages or in unconscious ways.  Meanwhile, children learn the behaviors that take them into adulthood by observing what parents do.  These observations can override financial knowledge in shaping behavior.

For example, college students who remember that their parents had healthy credit card practices, such as living within their means, are more successful at keeping their college debt under control.  Generally, parents are advised to talk about financial matters with their children – it’s known as parental financial socialization.  Avoiding such conversations has a negative effect that can “wreak havoc on children as they age.” In extreme cases, silence can lead some to hoard money as adults and others to be careless spenders.

Financial dependence in post-adolescence is an emerging issue as young adults extend the amount of time they live in their parents’ homes, often to cope with college debts and inadequate employment options.  Young adults whose parents provide financial help tend to develop dependency. In contrast, the offspring of people with fewer financial resources – who can’t help their children – learn more quickly to become financially independent. …
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From Anxious Child to Finance Star

An interesting psychology powers this video in which the youngest daughter of a low-income, single mother explains how she migrated into the financial services industry – and then became the company president.

Mellody Hobson’s fascination with finance took hold as she watched her mother struggle with evictions, repossessed cars, and empty gas tanks. She once spent all her money on her daughters’ Easter dresses but then couldn’t pay the phone bill, Hobson recalls in the video above.

“I do not think it’s an accident I work in the financial industry,” she explains, “because as a child I was desperate to understand money – desperate.  I hated the fact that I felt this insecurity around money.”

Hobson is a celebrity in her industry. In other videos, she talks about being black, being a successful career woman, being financially savvy, and the trouble with credit cards.  Perhaps she’s all over YouTube, because she’s worth listening to.Learn More

Rewriting Retirement Header Illustration

Finally Retired? Now What?

Gerry's signIt was Gerry Smythe’s final confirmation he had never quite felt at home working in the Oklahoma airplane manufacturing plant.  When well-meaning coworkers bought a cake to celebrate his and another person’s retirement, they got Smythe’s name wrong on the sign inviting everyone to the break room.

At age 63, he until recently was one of the nation’s 10 million older Americans working in physically demanding jobs in difficult conditions. He felt worn down by the factory noise, carbon dust, and standing all night on collapsed arches to assemble cabin floor beams for Boeing 777s.  His requests for a transfer away from the hard floor never went anywhere, he said.

“It wasn’t really the job – I kinda liked the job,” said Smythe, who retired on May 27. “I didn’t want to stick in that environment in which I was dealing with air pollution and chemicals and decided I’d had enough.”

Now retired, Smythe savors his freedom.  He’s playing more golf, has maintained his obsession with the Sunday crossword puzzle, and might volunteer at an animal shelter. But he also admits to something others have learned upon retiring: it’s a lot to get used to.

“You’re transitioning to a new phase of your life, and you’re not sure where to go. It is sorta scary,” he said in a telephone interview on a sizzling summer day at his home in Tulsa.

Everything is up in the air.  He likes Tulsa but might move back to Tennessee – he once worked at the Memphis airport – or to Houston, where his mother’s family hails from.  Or maybe he’ll find another job. The aviation industry is booming, so a few recruiters have called him. …Learn More

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