March 22, 2018
Creating Paths to Latino-owned Business
Rank-and-file workers’ wages have barely gone up since the 2008-09 recession, despite a U.S. job market firing on all cylinders for several years.
Latinos struggle more than most. Take restaurant workers. They are overrepresented in an industry that expanded rapidly post-recession, putting hundreds of thousands of cooks, waiters, and busboys to work. But “those are some of the worst jobs” says Carmen Rojas, who heads The Workers Lab in Oakland, which supports small entrepreneurs.
Food-service and other low-paying jobs not only lack benefits and security but typically don’t invest heavily in training and don’t provide upward mobility, “proving what it means to debase the promise of work away from opportunity and toward survival,” said Marie Mora of the University of Texas in the Rio Grande Valley.
She and Rojas were panelists at a recent Aspen Institute event to discuss Latino economic challenges and solutions. The focus was on new avenues to increasing their presence among small businesses, which are a good fit for their particular interests, needs, and culture.
There are, of course, extraordinary models of success in the Latino community. Maria Rios emigrated from El Salvador as a teenager and has the gumption of a character in a 19th century Horatio Alger novel. In the early years of her multi-million-dollar recycling and waste company in Houston, she drummed up commercial clients by showing up and pointing out their overflowing dumpsters. “When I see trash, I see opportunity!” she says on Nation Waste Inc.’s website.
“I feel that if I did it, anybody can do it,” she told the other panelists and audience. …Learn More
January 2, 2018
Baker’s Dozen: Popular Retirement Blogs
Appropriately, the most popular blogs over the past six months were about retirement, among both the young adults looking ahead to it and the later baby boomers heading toward it.
Based on page view counts, here were the most-read blogs on Squared Away during the last six months of 2017:
Retirement Calculators: 3 Good Options
Why Many Retirees Choose Medigap
Reverse Mortgage: Yes or No?
Why Most Elderly Pay No Federal Tax
The 411 on Roth vs Regular 401ks
Medicare Advantage Shopping: 10 Rules …Learn More
December 7, 2017
How Social Security Gets Fixed Matters
As more baby boomers retire, Social Security’s impending financial shortfall will become more pressing.
To restore solvency, Congress can either cut Social Security’s pension benefits or increase the payroll taxes deducted from workers’ pay.
Both policies would impact how much is available for households to spend. Researchers at the Center for Retirement Research find that the benefit reductions would have an appreciably larger annual impact on retirees than would the higher taxes on workers. But the taxes would be spread over a longer time period.
The new study looks at four specific policies, two that cut retirement benefits and two that raise taxes. Each policy analyzed would equally benefit Social Security’s finances.
Gauging their separate effects required using a model to predict workers’ behavior. This was necessary because some workers might feel they should retire earlier if more taxes are being taken out of their paychecks. On the other hand, if their future pension benefits will be trimmed, they might decide to work a few more years to increase the size of their monthly checks.
One option for reducing Social Security payouts would be to delay the full retirement age (FRA) at which retirees are eligible to collect their “full” benefits. A second option is trimming Social Security’s annual cost-of-living (COLA) increases.
A two-year increase in the FRA, to 69, would reduce annual consumption in retirement by 5.6 percent for low-income, 4 percent for middle-income, and 2.2 percent for high-income retirees. …Learn More
June 13, 2017
Social Security’s Legacy to Ex-Wives, Kids
Social Security Administration poster, 1956
Many women are fuzzy on how Social Security benefits for widows work and even more unclear about the program’s spousal benefits.
I know two of these women. Their situations nicely illustrate how this federal program promotes the well-being of older women and families.
One is my divorced aunt. She was surprised to learn, after my uncle died a few years ago, that her widow’s – or survivor’s – benefit, based on his decades of work as a housing developer, would be double the spousal benefit she’d received while he was alive. Divorced spouses are eligible for the same spousal and survivor’s benefits as still-married spouses, though only if the marriage lasted more than 10 years.
For a more complex experience involving Social Security’s child, spousal and survivor benefits, consider a friend of mine, who married an older man with whom she adopted two baby girls from China.
The couple divorced after 12 years, but John remained a loving older father. He showered his little girls with attention and, as they grew up, spoiled them with shopping excursions to the mall. But one of his best gifts came after he retired: Social Security benefits that provided financial security to his daughters and their mother.
John, like many older men, had difficulty finding steady work, but earlier in his career, he’d been a well-paid executive. On the strength of this earnings history, John signed up for his Social Security pension when he reached his full retirement age. His initial benefit was $2,209. In addition to this benefit, $828 per month went to each of his daughters, who were in elementary and middle school at the time.
Under Social Security’s rules, benefits go to children under age 16 when a parent is collecting a Social Security pension. This continues until the child reaches age 18 (or 19, if they’re still in high school). Each child’s benefit is precisely half of the parent’s pension, but John’s daughters received less than half because they bumped up against Social Security’s family maximum.
When John died a year ago, at age 73, his Social Security legacy continued. …Learn More
May 18, 2017
Women Get a Bigger Social Security Bump
The magic number is 35.
That’s how many years of earnings the U.S. Social Security Administration (SSA) uses to calculate every worker’s pension benefit. But 35 years can be a tall order for the many boomer women who took time off or cut back on their hours to raise their children. Nearly half of 62-year-old working women today didn’t make any money for at least one year in their earnings history on record with SSA.
But this also means they have more to gain financially than men from working longer, because each additional year of work substitutes for a zero- or low-earning year during motherhood in the benefit calculation, according to research by Matt Rutledge and John Lindner at the Center for Retirement Research, which sponsors this blog.
Beefing up one’s earnings record is actually one of the two ways that working longer raises monthly benefits. The other, more familiar way is a benefit increase from delaying collecting Social Security.
Delaying claiming compresses the time period over which workers will receive benefits. The resulting increase when they finally do start is known as Social Security’s “actuarial adjustment.” Take the most extreme example: both men and women who begin their Social Security at age 70 receive 76 percent more per month from this adjustment than they would’ve gotten had they started at 62.
But it is women who generally gain much more from additional years in the labor force.
By working to 70, rather than retiring at 62, the average woman can increase her monthly Social Security check by 12 percent, the researchers found. Adding this to the standard actuarial adjustment produces an 88-percent increase, from roughly $1,112 per month at 62 to $2,090 at age 70.
The earnings bump that 62-year-old men get from working to 70 is half as big – about 6 percent – because men typically already have had more years of higher earnings during their working lives.
A woman doesn’t have to work all the way to 70 either to benefit. Any period of delay will increase monthly benefits – and that will help. …Learn More
February 21, 2017
A Bigger Bite Out of Social Security
Most retirees didn’t notice the $5 cost-of-living increase in the average Social Security check. That’s because the Part B Medicare premium deducted from their checks went up nearly as much (from $104.90 in 2016 to an average $109 this year).
Beyond premium hikes, the bigger issue for retirees are the additional out-of-pocket costs they must pay as part of their Part B coverage for doctor visits and outpatient care. When rapidly rising copayments are added to the basic premium, they together consumed more than 15 percent of the average Social Security benefit last year. That is more than double the percentage in 1980, and it’s expected to exceed 17 percent by 2030, according to the Centers for Medicare and Medicaid (CMS).
The CMS estimates were made prior to the announcements of 2017’s final COLA and Part B increases. But the trend of eroding benefits was confirmed by Juliette Cubanski, associate director of Medicare policy for the Henry J. Kaiser Family Foundation. …Learn More
November 17, 2016
Early Social Security Filers Afraid to Lose
Retirement experts and financial advisers maintain there is a right way and a wrong way to approach Social Security.
For most people, the right way is to view waiting until your late 60s to sign up for benefits as the route to boosting your retirement income and protecting against out-living your savings. People who delay will have a larger Social Security check to pay the bills that come due every single month for as long as they live.
The wrong way is to make a decision based on fear – the fear of losing money if you don’t sign up soon after turning 62, the earliest age allowed under the program. While you might feel that delaying means losing out, delay can, in fact, protect you and your spouse from a more consequential loss in the future: inadequate monthly income when you are very old.
A study on this issue used a new technique to identify which individuals possess this fear of loss. In six different online surveys, the researchers asked some 7,000 working-age adults to choose between numerous pairs of gambles showing the probabilities of scoring a financial gain (45 percent), losing money (45 percent), or breaking even (10 percent). In each pair, one gamble had a smaller potential dollar loss than a second gamble in which they could lose more money – but also win more.
Loss aversion was prevalent. They found that about 70 percent of adults showed some degree of loss aversion, meaning that they preferred the gamble that risked a smaller dollar loss.
Next, the researchers analyzed whether the people who were most loss averse also plan to claim their Social Security benefits at younger ages. In all six surveys, the most loss-averse workers were significantly more likely to claim their benefits earlier.
The researchers hope their new technique and findings improve the ability to identify who is loss averse, so that experts can design better ways to help people make smart decisions about their Social Security, the bedrock of most Americans’ retirement security. Learn More