April 20, 2021
How Many Kids Will 30-Somethings Have?
U.S. fertility is already at record lows, and women in their 30s have had only 1.3 children on average – well short of their expectations for more than two children.
But they still have time left on their biological clock. So, will they catch up?
Several factors are working specifically against the college graduates in this cohort. Religiously observant people usually have more children, and the decline in religious affiliation is reducing their fertility. Their fertility is also being hurt by the falling marriage rate, which leaves fewer couples ready to raise a family. In addition, the women’s careers often compete with having children.
In a new study, Anqi Chen and Nilufer Gok at the Center for Retirement Research predicted that the final fertility rate for Millennials in their 30s – the rate at the end of their childbearing years – will average 1.96 children.
If this prediction proves accurate, it would get them somewhat closer to what they’d expected and close to the number of children required to replace two parents.
Predicting the final fertility rate for the Millennial women born in the early 1980s required going back in time to analyze the established patterns of a generation that is now past its childbearing years: women born in the second half of the baby boom wave. The researchers applied what they learned about these late boomers and, after adjusting for recent trends, estimated final fertility for today’s 30-somethings.
The 1.96 fertility rate sounds encouraging, but that number applies only to these Millennials. The longer-term prospects suggest fertility may be lower in the future. …Learn More
April 15, 2021
First, Money Woes. 6 Years Later, Dementia
My 85-year-old mother is on top of her bills. She pays several of them online, which is impressive enough, and she knows which bill is due when.
So, we should both take some comfort in the fact that she is not having difficulty managing her money, which is an early sign of dementia.
The connection between poor money management and declining cognitive capacity was established in research years ago. An obvious next question – when does this early warning system kick in? – is answered in The Journal of the American Medical Association.
The researchers followed more than 81,000 men on Medicare for more than a decade and linked their medical records to their Equifax credit reports. The men who would eventually be diagnosed with Alzheimer’s disease or dementia started missing the due dates on their bills about six years before the diagnosis.
There are many reasons for the gap between signs of trouble and an actual diagnosis. If family don’t detect a decline in cognitive ability, they won’t ask a doctor to administer a dementia test. Family might confuse early-stage dementia with memory loss, which is a natural part of aging. One financial manager said some of her clients try to hide that they’re having trouble handling their finances – or “do not want to admit the problem to themselves.”
If dementia goes undiagnosed, the financial problems get worse. A second finding in the study was that about 2½ years prior to a dementia diagnosis, retirees’ credit scores were much more likely to slip to subprime levels, or below 620 points. …Learn More
April 13, 2021
People Don’t Save for a Nursing Home Stay
About 13 percent of the older people in a recent study – average age 74 – who were initially living independently moved into a nursing home within five years.
Perhaps because they know their vulnerabilities, their expectations of whether they would one day need nursing home care helped predict their actual nursing home use, the study found.
In fact, the researchers said, the accuracy of the predictions showed that the older people must have taken into account personal information that went beyond what was apparent in the 1998-2016 survey data used in the study, which included details about their health, ease of functioning, and other influences on whether they need care.
However, foresight did not translate into facing up to the financial implications of a nursing home stay.
Nursing homes are expensive, currently averaging $7,700 per month for a room that is shared with another resident. The 10 percent of older people with a private long-term care insurance policy can pay for their care. Poor people’s nursing home expenses are covered by Medicaid.
It’s the people who fall outside these two groups who aren’t always clear about how to pay for a nursing home stay if they need it. Their lack of preparation for this expense was underscored in another of the study’s findings: the people who say they’re more likely to go into a nursing home were no more likely to have built up their savings to pay for it.
Of course, Medicaid is also a backup plan for nursing home residents who start out paying for their care but run through all of their savings. This study helps to explain why Medicaid covers six in 10 nursing home residents.
April 8, 2021
Women of Color Go into Construction Trades
The annual pay for a plumber in Omaha, Nebraska, with three years of experience is around $55,000 a year, while a certified nursing assistant there earns $30,000. Or compare an electrician in the Phoenix area making $62,000 to $39,000 for a dental assistant.
Recognizing that many of the occupations dominated by women don’t pay well, young women of color are increasingly moving into the construction trades. Black, Latina, and Asian women and women of mixed race account for 45 percent of the 308,000 women working in the trades. This exceeds their 38 percent share of the women’s labor force overall, according to an analysis of 2016-2018 data by Ariane Hegewisch of the Institute for Women’s Policy Research. The largest group is Latina women.
Women of color are gravitating to construction jobs – carpenter, electrician, laborer, plumber, mason, painter, and metal worker – because they offer paid apprenticeships, good pay, and benefits to workers who don’t have a college degree. The International Union of Painters and Allied Trades even has maternity leave.
Being a sheet metal worker has “given me the financial ability to take care of my family,” Monica Yamada, a member of Local 104 in San Francisco, said in a recent webinar hosted by the policy institute and Chicago Women in Trades.
But working in a man’s world is challenging. Women say they often feel marginalized or harassed, or they receive fewer opportunities for career-advancing training or assignments at the construction site. “Women must fight to advance and to learn new aspects of the trade that men automatically get to do,” said the institute’s study director, Chandra Childers. …Learn More
April 6, 2021
Minimum Wage and Disability Applications
Do applications for federal disability benefits rise, fall, or remain unchanged when the minimum wage increases?
Understanding whether the minimum wage affects disability applications is an important issue as Congress debates an increase in the federal minimum and the states have been very active: 14 states began last year with a higher minimum wage after passing new legislation or ballot initiatives. Another seven states had previously enacted automatic yearly increases in their minimums.
One possibility considered in a new study is that applications to the U.S. Social Security Administration for disability benefits could decline if wages increase enough to make a steady paycheck that much more appealing than a modest monthly disability check. But Syracuse University economist Gary Engelhardt finds that hiking the minimum wage did not reduce applications from 2002 through 2017.
Since applications didn’t go down, could a higher minimum wage increase applications instead? Some economists argue that employers, when faced with a higher mandatory wage, may lay off some of their less-skilled hourly employees or cut back their hours. This might – indirectly – be a motivation to apply for disability.
Engelhardt tested this idea in a second analysis, recognizing that it takes time for employers to make staffing changes in response to a higher wage. Once again, he found no impact on disability applications.
“Changes in the minimum wage are not moving individuals on and off” of disability, the researcher concluded.
April 1, 2021
What the Research Can Tell us about Retiring
It’s difficult to envision what life will look like on the other side of the consequential decision to retire.
But research can help demystify what lies ahead – about the decision itself, the financial challenges, and even the taxes. Readers understand this, as evidenced by the most popular blog posts in the first three months of the year.
Here are the highlights:
The retirement decision. The article, “Retirement Ages Geared to Life Expectancy,” attracted the most reader traffic. Myriad considerations go into a decision to retire. But a sense of whether one might live a long time – because of good health or simply seeing that parents or neighbors are living unusually long – is a compelling reason to postpone retirement either to remain active or to build up one’s finances to fund a longer retirement.
A recent study found that as men’s life spans have increased, they have responded by remaining in the labor force longer, especially in areas of the country with strong job markets and more opportunity. This is also true, though to a lesser extent, for working women.
The planning. The second most popular blog was, “Big Picture Helps with Retirement Finances.” It described the success researchers have had with an online tool they designed, which shows older workers the impact on their retirement income of various decisions. When participants in the experiment selected when to start Social Security or how to withdraw 401(k) funds, the tool estimated their total retirement income. If they changed their minds, the income estimate would change.
The tool isn’t sold commercially. But it’s encouraging that researchers are looking for real-world solutions to the financial planning problem, since the insights from experiments like these often make their way into the online tools that are available to everyone.
The taxes. It’s common for a worker’s income to drop after retiring. So the good news shouldn’t be surprising in a study highlighted in a recent blog, “How Much Will Your Retirement Taxes Be?” Four out of five retired households pay little or no federal and state income taxes, the researchers found. But taxes are an important consideration for retirees who have saved substantial sums. …Learn More
March 30, 2021
Working Multiple Jobs to Make Ends Meet
If people need to work and can work, they will work. That’s my takeaway from a new set of data that sketches a clearer picture of U.S. workers who are holding down multiple jobs.
Nearly 8 percent of workers had two or more jobs in 2018, the latest year of data available from the U.S. Census Bureau. The data also show that holding two or more jobs becomes more common during economic expansions, when jobs are plentiful, and falls during recessions, when the opportunities dry up.
But the longer-term trend is up: the share of people holding multiple jobs has slowly increased over the past two decades. In a recent webinar, Census Bureau economist James Spletzer provided a couple of reasons.
First, the country has lost millions of manufacturing jobs over several decades. They have been replaced by lower-quality jobs in retail and in service industries like health care, hotels and food preparation – and that’s where multiple job holders tend to work.
A second, related reason for working in multiple jobs is the “stagnation of earnings at the lower end of the earnings distribution,” Spletzer said. …Learn More