January 23, 2020
Medicaid Expansion has Saved Lives
The recent rise in Americans’ death rates is a crisis for the lowest-earning men. They are dying about 15 years younger than the highest-earners due to everything from obesity to opioids. Women with the lowest earnings are living 10 years less.
But healthcare policy is doing what it’s supposed to in the states that expanded their Medicaid coverage to more low-income people under the Affordable Care Act (ACA): helping to stem the tide by making low-income people healthier.
An analysis by the Center for Poverty Research at the University of California, Davis, found that death rates have declined in the states that chose to expand Medicaid coverage. The study focused on people between ages 55 and 64 – not quite old enough to enroll in Medicare.
Medicaid has “saved lives in the states where [expansion] occurred,” UC-Davis researchers found. They estimated that 15,600 more lives would have been saved nationwide if every state had covered more of their low-income residents.
This is one of many studies that takes advantage of the ability to compare what is happening to residents’ well-being in states that expanded their Medicaid programs with the states that did not. Progress has come on many fronts.
In expansion states, rural hospitals, which are struggling nationwide, have had more success in keeping their doors open. By covering more adults, more low-income children have been brought into the program, which one study found reduces their applications for federal disability benefits as adults. And low-income residents’ precarious finances improved in states where Medicaid expansion reduced their healthcare costs. …Learn More
January 21, 2020
Denied Disability, Yet Unemployed
Most people have already left their jobs before applying for federal disability benefits. The problem for older people is that when they are denied benefits, only a small minority of them ever return to work.
Applicants to Social Security’s disability program who quit working do so for a combination of reasons. They are already finding it difficult to do their jobs, and leaving bolsters their case. However, when older people are denied benefits after the lengthy application process, it’s very challenging to return to the labor force, where ageism and outdated skills further complicate a disabled person’s job search.
A new study looked at 805 applicants – average age 59 – who cleared step 1 of Social Security’s 5-step evaluation process: they had worked long enough to be eligible for benefits under the disability program’s rules. The researchers at Mathematica were particularly interested in the applicants rejected either in steps 4 and 5.
Of the initial 805 applicants, 125 did not make it past step 2, because they failed to meet the basic requirement of having a severe impairment. In step 3, 133 applicants were granted benefits relatively quickly because they have very severe medical conditions, such as advanced cancer or congestive heart failure.
The rest moved on to steps 4 and 5. Their applications required the examiners to make a judgment as to whether the person is still capable of working in two specific situations. In step 4, Social Security denies benefits if an examiner determines someone is able to perform the same kind of work he’s done in the past. In step 5, benefits are denied if someone can do a different job that is still appropriate to his age, education, and work experience.
In total, just under half of the 805 applicants in the study did not receive disability benefits. …Learn More
January 16, 2020
Retiring in Florida: The Villages vs Reality
May all your dreams come true.
This hope, displayed on a sign in The Villages retirement community in north central Florida, is why thousands of people flock there every year to retire.
During my annual holiday trek to visit my 84-year-old mother in Orlando, my husband and I drove her to The Villages to visit her good friend who had moved there. What struck me was the contrast between its over-the-top comforts and my mother’s modest retirement community just outside Orlando, where many of the residents, who heavily depend on their Social Security, are just barely getting by.
The differences in lifestyles reflect the retirement disparities that exist in this country and are a continuation of the disparities in our working population. But I was also struck by the similarities in what retirees – regardless of their socioeconomic status – are seeking: to live out their remaining days healthy and without worry.
The Villages is 32-square-miles of unbridled growth. The 55+ community features three Disney-like town squares – Spanish Springs, Brownwood, and Sumter Lake – with a fourth, Southern Oaks, under development. Retirees zip along in colorful golf carts through the perfectly landscaped grounds on paths that were designed for the vehicles. The residents use the golf carts to move between their tidy houses, the town squares, activity centers, and one of The Villages’ 53 golf courses and 100 pickle ball courts. There’s even a gas station for golf carts – that’s how integral they are to retirees’ lives.
It seems that the box stores and supermarkets have been placed on the edges of this sprawling development so as not to spoil the vibe – retirees drive cars to these destinations. Also on the periphery are establishments catering to the unappealing aspects of growing old: laser eye surgery centers, dialysis centers, assisted living facilities, and funeral homes. Old age is tough – even in The Villages. For example, my mother’s friend lost her husband and then – a few years later – her fiancé died.
The Villages’ creature comforts are expensive. Prices are high by the standards of Florida’s interior, ranging between $250,000 and $800,000. Residents often pay for them by selling a house up north to cash in on the appreciation. They also pay an assessment to cover the development’s infrastructure costs and a monthly fee of just over $1,000 for utilities, trash pickup and endless amenities, which, in addition to golf, include numerous activity centers, lakes for fishing, and easy access to the town centers’ restaurants, Starbucks, shopping, and movie theaters.
But this enclave of privilege and play doesn’t reflect the reality for most retirees. My straight-talking Midwestern mom’s assessment of The Villages is, simply, “I can’t afford it.” …Learn More
January 14, 2020
Oddly, the Educated Pay Higher Fees
It’s smart to invest retirement savings in mutual funds that charge very low fees for one simple reason: the worker keeps more of his money and hands over less to Wall Street.
But in a study of people in their 50s and 60s who have retired or otherwise left federal employment, the people with the most education and the best scores on a standardized test were more likely to make what seems to be the wrong decision. Rather than keep their retirement funds in the government’s Thrift Savings Plan (TSP), which has extremely low fees, they transferred the money to much higher-fee IRAs operated by financial companies.
The $500 billion TSP – the world’s largest defined contribution retirement plan – is inexpensive in large part because it invests only in index mutual funds, which automatically track a variety of stock and bond market indexes and avoid the need to pay money managers to pick the investments. The annual fees for TSP’s index funds – known as expense ratios – are under 0.04 percent of the investor’s assets.
But over a 10-year period, about one fourth of the former federal employees rolled over the money saved during their careers into IRAs that typically had much higher expense ratios: 0.57 percent. On top of that, IRAs often charge additional fees for investment advice, pushing the potential total annual fees to well in excess of 1.5 percent. It’s possible that investing in an IRA could generate enough returns to make the extra fees worthwhile, but research has shown this is not the norm.
What explains the rollover decision? More educated people tend to have larger retirement account balances, raising the possibility that they were either seeking out financial advice or were targeted by advisors’ sales pitches. However, even among people with similar balances, those with more education were still more likely to roll over to IRAs.
It’s possible that they “perceive that they know what they’re doing” and want to take control of their investments “even when higher fees result,” the researchers said. …Learn More
January 9, 2020
Retiree Living Standards, Ranked by State
How well you will live in retirement will depend on two things: your income and the local cost of living.
A new study that ranks each state based on how many of its retirees can meet a basic standard of living comes up with an interesting combination of places that are financially friendly – or not – to people over 65.
For example, who would expect Mississippi to be in the same company with California?
The cost of living in Mississippi is much lower than in California – and most states. But 31 percent of Mississippi’s retired single people and 24 percent of its retired couples fall into what the study calls the “gap” between being poor and having barely enough income to cover their basic expenses, according to a 50-state analysis by the University of Massachusetts’ Gerontology Institute in Boston.
A general way to think about the people inhabiting this gap is that, while they are above the poverty line, they are still financially insecure.
“A lot of the folks who find themselves in the gap were middle class,” said Jan Mutchler, a U-Mass Boston professor and institute staff member. They have pensions or other income in addition to Social Security, she said, “and yet they’re still struggling.”
When the poor are added in, a total of 57 percent of Mississippi’s retired singles and 30 percent of its couples do not have the income required to pay for all of their essential household expenses, according to the analysis.
Like Mississippi, the share of older Californians who are feeling financially insecure is also one of the highest in the country: 34 percent of single people and 22 percent of couples. When poor retirees are included, the numbers rise to 54 percent and 27 percent, respectively.
Many people in California and Mississippi are having a difficult time – but for very different reasons. …Learn More
January 7, 2020
Credit Cards are the Most Stressful Debt
Debt is stressful. But did you know your stress level depends on the type of debt you have?
Credit cards cause far more stress than first mortgages and lines of credit, a study by Ohio State researchers finds. The more striking finding is that reverse mortgages, which allow people over age 62 to tap the equity in their homes, may reduce stress – at least temporarily.
The researchers used a simple example to illustrate the magnitude of credit card stress. Charging $640 on a card is as stress-producing as adding $10,000 to a mortgage. Credit cards are more stressful than home loans, because the balances on high-rate cards increase quickly when they’re not paid off, and the debt is not backed by an asset.
The researchers considered households to be debt-stressed if they said in a survey that they have had recent difficulty paying bills or have generally experienced financial strains.
This study focused on people over 62. As the share of older Americans carrying debt into retirement has increased, so have the amounts they owe. Debt arguably is very stressful for older workers, who have a dwindling number of years to get their finances under control before retiring, and for retirees, who have to live on fixed incomes.
The findings for reverse mortgages were nuanced – and interesting. Reverse mortgages create less stress than a standard mortgage and are much less stressful than consumer debt. On average, four years after taking out a reverse mortgage, the household’s stress level is 18 percent lower than it was at the time of the loan’s origination, according to the researchers, who did the study for the Retirement and Disability Research Consortium.
But things can change over time. Retirees often use federally insured reverse mortgages to pay off debt or as a regular source of income. But the amount owed on a reverse mortgage increases over time, because retirees do not have to make payments, and the interest compounds. (The loans are paid off when the owner either sells the house or dies.) …
January 2, 2020
States Give Financial Help to Caregivers
On Jan. 1, Arizona residents caring for elderly or disabled family members became eligible for up to a $1,000 reimbursement from the state for expenses incurred in their caregiving responsibilities.
This is a trial program and the legislature allocated very little money – $1 million over two years – in a state with an estimated 800,000 residents caring for a disabled adult over 18.
But it’s a start.
Caregivers “aren’t asking for everything. They’re asking for a little bit to make their lives better,” said Elaine Ryan, vice president of government affairs for AARP, which has been on the forefront of advocating for such policies at the state level. “That’s the least we can do.”
Arizona’s program would defray a portion of caregivers’ spending. For older family members, this would cover technologies to aid older family members, such as hearing aids or computer programs, or shower grab bars and wheelchair ramps.
Like Arizona, state governments around the country, as laboratories for policy experimentation, have passed a hodgepodge of programs to support caregivers. Other bills approved in recent years range from New Jersey’s tax credit for military families caring for wounded veterans to Oregon’s paid family leave program for workers taking care of aging spouses, parents and grandparents.
The programs are a tacit acknowledgment of the enormous financial strain caregivers face – a strain that is only expected to grow and, increasingly, to affect Millennials as their baby boomer parents age.
However, it’s not easy to pass bills that require states to approve financial assistance or tax credits, because the work done quietly by family caregivers is often invisible and under-appreciated by the general public and federal and state legislators. …Learn More