Posts Tagged "saving"

Job Quality Matters

The nation created 192,000 new jobs in March, suggesting the economy is gaining moment.  But it’s not just getting a job that’s key to gaining financial security – it’s about getting and keeping a quality job.
Quote about disability insurance

In a recent report, the Institute on Assets and Social Policy at Brandeis University used interviews with workers around the country to identify three aspects of a job – beyond the size of the paycheck – that help people save money and bolster their financial security.  [Excerpts from some of the interviews are shown.]

The report also gave some indications of how common it is for workers to go without them:

Quote about health insuranceBenefits – Employer health care, disability insurance, a 401(k) retirement plan with an employer savings match, tuition credits – these benefits help workers save more, shield them against risk, and protect their paychecks by subsidizing some living costs.  But the service sector, one of the largest segments of the U.S. labor force, is particularly poor in providing such benefits.

Flexibility – Without sick days and similar arrangements, workers risk losing their jobs due to an illness or unanticipated event. …Learn More

Social Security 101

As a young adult starting my career in Chicago in the 1980s, I didn’t have a clue how Social Security worked or why money was being taken out of my scrawny paycheck.

But trust me on this: the Social Security retirement program becomes a lot more interesting to workers as they age and their retirement horizon comes into sharp focus.  It affects just about every American – and most of us pay into it.

It is not only the bedrock of retirement for millions of Americans and their spouses, but it’s also a source of income for their survivors, including children, and workers who become disabled.

In this video, officials from the U.S. Social Security Administration explain what its programs do and why they matter. Learn More

Marching to Retirement Without a Plan

401k participation chartOnly about half of all U.S. workers in the private sector participate in retirement savings plans at their current places of employment, according to a new report by the Center for Retirement Research.

Pension coverage in this country “remains a serious problem,” concludes the Center, which also sponsors this blog.

The goal of the Center’s report is to make sense of the myriad estimates of how many Americans are covered at work. One prominent source of data is the federal government’s survey of employers, the National Compensation Survey. The NCS shows that 78 percent of full-time workers, ages 25 through 64, have some type of defined benefit or defined contribution plan available to them at work.

But that’s the rosiest way to slice the data.

The share of employees who are covered slides to 48 percent when public-sector, often unionized, workers are stripped out of the NCS; when part-time, private-sector workers are added in; and when one counts only the share who actually participate in an employer plan when it’s offered to them. …Learn More

Post Recession: Strugglers vs Thrivers

The Federal Reserve Bank of St. Louis, based on its analysis of data from the Survey of Consumer Finances, estimates that the recession has ended for only about one-quarter of the U.S. population – the thrivers, who have paid down their debts and restored their savings.  That would leave three out of four Americans who are still struggling. Squared Away interviewed Ray Boshara, director of the Center for Household Financial Stability at the bank; Bill Emmons, senior economic adviser; and Bryan Noeth, policy analyst, for their insights into why most Americans’ net worth – their assets minus debts – hasn’t recovered.

Q: You distinguish “thrivers” from “strugglers.” Who are these two groups?

Boshara: The thrivers versus strugglers construct is a simple way to make the point that some demographically defined groups are doing better, on average, than others in terms of net worth – what you save, own, and owe, or your entire balance sheet. We found that age, race, ethnicity and education levels are pretty strong predictors of who lost wealth and who’s recovered wealth over the past few years, as well as over a longer period of time.

Q: Describe the typical thrivers.

Emmons: Whites and Asians with a college degree who are over 40 – that’s the typical thriver. Remember, this is a construct, and it’s not 100 percent foolproof.  But you would tend to say these groups are more likely to have outcomes consistent with recovering.

Q: How about the typical strugglers?

Emmons: By age – they’re younger – and they’re African-American or Latino. They also do not have a college degree, and they have too much debt. They’re the other three-fourths of the population. They are not holding enough liquid assets, so they’re just one paycheck away from a crisis. They do not have a diversified portfolio and aren’t benefitting from the stock market gains. They’ve got too much in the house, which has declined in value.

Q: What have you learned about young adults and their wealth – or lack of it?

Emmons: It jumps off the page in our analysis: It doesn’t matter if you’re white or college educated.  If you’re young, you’re vulnerable, and you’ve made the same portfolio mistakes as people with less education: low levels of liquid assets, too much in the house, an issue that is related to portfolio diversification, and more leverage. …Learn More

Minimum Wage Workers: Who are They?


Whether or not you agree that the minimum wage should be raised, there are very real financial strains on the 5 percent of U.S. hourly workers who earn no more than $7.25 per hour, the current federal minimum wage.

This video, produced by Bloomberg TV, puts a human face on a few of these 3.5 million workers.  Data from the U.S. Bureau of Labor Statistics provides more information about who they are:

  • Nearly half are over age 25.
  • Two-thirds are women, and one-third are men.
  • About three-fifths of minimum-wage workers are in service occupations, such as food preparation and food service.

Learn More

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Gen-X Retiree Income Inequality to Widen

There’s a growing awareness of the chasm between average working Americans and those at the top of the earnings scale.

What isn’t widely recognized is that this broad economic trend is spilling over into retirement incomes, which depend on how much people earn and save while they’re still working.

“The increasing wage inequality we see during the working years plays out over the life course and will result in more unequal incomes at older ages,” said Richard Johnson, an economist with the Urban Institute in Washington.

Johnson recently compared the incomes of today’s retirees with his income projections for the youngest members of Generation X who will enter retirement in about 30 years.  He found that the imbalance between those at the top and bottom is expected to be wider for Gen-X.

In his study, retiree income includes Social Security benefits, pensions from traditional defined benefit plans, and employment earnings.  Johnson also assumes that people spend down their 401(k)s, but he does not include equity in one’s home, which retirees can also convert to income. …Learn More

debt climber

Retirement Delayed to Pay the Mortgage

Older Americans who are in debt are choosing to delay their retirement, researchers conclude in a new working paper.

In earlier findings released last summer, the researchers, Barbara Butrica and Nadia Karamcheva of the Urban Institute, documented the growing prevalence of borrowing since the late 1990s among adults ages 62 through 69. Median debt levels among those who owe also surged from $19,000 to $32,100, adjusted for inflation – and debts as a share of their assets increased.

Now comes the rest of the story. When the researchers controlled for health, financial assets, home values, and other forms of wealth, as well as spouses’ earnings and other factors that play into decisions about retiring, they found that individuals with debt, especially mortgages, behave differently than those who are debt-free.

Here are their main findings:

  • Nearly half of all people in their 60s with debts continue to work, compared with only one-third of those who have no debt. …

Learn More

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